Newsletter
Partial Amendment to Regulations Governing Insurance Enterprises Conducting Foreign Investment
FSC issued a ruling (Ref. No. Jin-Kuan-Pao-Tsai-10302503591) on 22 April 2014 to partially amend the Regulations Governing Insurance Enterprises Conducting Foreign Investment. Main points of the amendment are as follows:
1. To encourage domestic bond market development and expand investment opportunities for insurance enterprises, insurance enterprises are now allowed to invest in additional types of foreign securities including foreign currency denominated securities or debt certificates listed on domestic stock exchange or traded in domestic over-the-counter market, with related investment qualifications and amount limit stipulated.
2. To enhance insurance enterprises' flexibility in investing in real estate abroad and in Mainland China area as well as information transparency, newly added rules are as follows:
(1) New addition that the insurance enterprises may acquire real estate abroad and in Mainland China area through real estate investment enterprises with loans provided to such enterprises for their business needs or trusts and stipulation regarding mandatory disclosure information during the investment period.
(2) Stipulation regarding the rules governing insurance enterprises' acquisition of real estate abroad and in Mainland China area through real estate investment enterprises and the procedure, loan qualifications and amount limit and required documents for competent authority's approval for the loan proceeds provided to such enterprises to invest in real estate abroad and in Mainland China area. In addition, the competent authority or its delegated appropriate institution or staff is allowed to conduct checks on financial, business and other necessary matters of such enterprises and insurance enterprises shall stipulate necessary internal control systems for such enterprises.
(3) Stipulation regarding the rules governing insurance enterprises' acquisition of real estate abroad and in Mainland China area through trusts, including applicable qualifications of trustee and required items of trust agreement executed by the insurance enterprise and a trustee, documents required to be submitted by insurance enterprises for competent authority's approval and information required to be reported to the competent authority annually.
3. Amendment to the relevant rules allowing an insurance enterprise whose Risk-Based Capital ratio is below legal standard but meets specified qualification to invest in Mainland China government bonds and treasury securities, conduct derivative transactions for hedging purpose or invest in corporate bonds and financial debentures traded on Mainland China Securities Market or Inter-Bank Bond Market, securities investment funds and Exchange Traded Funds listed on Mainland China exchanges as approved by the competent authority.