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TABLE OF CONTENTS CHAPTER I GENERAL PROVISIONS CHAPTER II DIRECTIONAL COLLECTION CHAPTER III REPAYMENT OF DEBTS CHAPTER IV INFORMATION DISCLOSURE CHAPTER V SUPERVISION AND ADMINISTRATION CHAPTER VI SUPPLEMENTARY PROVISIONS CHAPTER I GENERAL PROVISIONS Article 1. The present Measures are formulated in accordance with the Company Law of the People' s Republic of China, the Insurance Law of the People's Republic of China and the relevant laws and administrative regulations for the purpose of regulating acts of insurance companies for their directional collection, transfer, and repayment of principals and interests of subordinated term debts (hereinafter referred to "subordinated debts") as well as information disclosure, and ensuring the solvency of insurance companies. Article 2. The "insurance company" mentioned in the present Measures shall refer to the Chinese funded insurance company, Sino-foreign joint venture insurance company and wholly foreign owned insurance company established within the territory of China according to the Chinese law. Article 3. The "subordinated debts of an insurance company" mentioned in the present Measures shall refer to the debts of an insurance company, which are collected directionally by the insurance company upon approval, and whose time limit is five years or more, and the repayment order of whose principal and interests ranks after the liabilities in the insurance policy and other liabilities, and before the share right capital of the insurance company. Article 4. China Insurance Regulatory Commission (hereinafter referred to the CIRC) shall make supervision according to law over such acts of an insurance company as its directional collection, transfer, repayment of principals and interests of subordinated debts and information disclosure. Article 5. The insurance company that collects subordinated debts directionally (hereinafter referred to the "raiser") shall manage steadily to improve solvency and protect the lawful rights and interests of the creditors of subordinated debts. CHAPTER II DIRECTIONAL COLLECTION Article 6. An insurance company shall meet the conditions of the present Measures when collecting subordinated debts directionally and report to the CIRC for examination and approval. Article 7. An insurance company shall meet the following requirements when applying for directional collection of subordinated debts: (1) The audited net assets at the end of last year shall be no lower than RMB 500 million Yuan; (2) After collection, the accumulated amount of unpaid principals and interests of subordinated debts shall not exceed the un-audited net assets of the insurance company at the end of last year; (3) The company has good corporate governance structure; (4) The internal control system of the company is perfect and can be abided by strictly; (5) The assets of the company are not impropriated by any natural person, legal person or other organization and affiliated party that has actual control right; (6) Having no acts in violation of laws and regulations in the past two years; and (7) Other conditions prescribed by the CIRC. Article 8. The subordinated debts of an insurance company shall be collected directionally from qualified investors. The "qualified investor" shall refer to the investor who has independent analysis ability and risk tolerance ability for purchasing subordinated debts, including domestic legal person and overseas investors, but excluding: (1) Company under the control of a raiser; and (2) Company under the control of the same third party with the raiser. Article 9. The subordinated debts held by a single shareholder of the raiser and the controlling party of the shareholder shall not exceed 10% of the amount of collection in a single time or the accumulated amount, and the proportion for holding the amount of collection for a single time or accumulated amount of collection shall not be the highest. The accumulated subordinated debts held by all the shareholders of the raiser and the controlling party of all the shareholders shall not exceed 20% of the amount of collection for a single time or accumulated amount of collection. The relevant provisions of the CIRC shall be met for the proportion of subordinated debts mutually held by any insurance company that has the qualification of a qualified investor and any insurance capital management company. Article 10. The capital obtained by an insurance company from collection of subordinated debts may be reckoned in the attached capital, but shall not be used for making up the ordinary management loss of the insurance company. The amount of subordinated debts that may be reckoned in the attached capital determined by an insurance company shall comply with the relevant provisions on rules for compilation of solvency report promulgated by the CIRC. Article 11. The raiser shall engage law firms to issue legal opinions on the collection of subordinated debts of the current time. The legal opinions shall clearly state the opinions on the legitimacy and compliance of matters such as the collection conditions, collection plans, collection clauses, credit rating, and other matters concerned, etc.. The law firm shall issue legal opinions objectively and fairly and undertake the corresponding liabilities. Article 12. A raiser may engage credit rating institutions to make credit rating on the subordinated debts of the current time. A credit rating institution shall issue the relevant report documents objectively and fairly and undertake the corresponding liabilities. Article 13. A raiser may collect subordinated debts by itself or by entrusting an institution that has qualification for undertaking securities underwriting business. Article 14. The board of directors of an insurance company shall make plans for the collection of subordinated debts. And the shareholders' meeting shall make special resolution on the following matters concerned: (1) The scale, time limit for collection, and interests and objects thereof; (2) The use of the fund collected; (3) The period of validity of the resolution on the collection of subordinated debts; and (4) Other important matters concerned in relation to the collection of the subordinated debts of the current time. Article 15. An insurance company shall submit the following documents to the CIRC when applying for collection of subordinated debts: (1) Application report for collection of subordinated debts; (2) The special resolution of the shareholders' meeting on the collection of subordinated debts of the current time; (3) Feasibility study report, which shall include the following contents: 1. The analysis on the cost and benefit of the subordinated debts (the scale and time limit of the fund raised, pricing of the debts and cost analysis, the use of the fund collected, income prediction, influence to the solvency, etc.); and 2. The determination of the targeted creditor and its/his status; (4) Prospectus; (5) The text of the agreement or contract of the subordinated debts and the legal opinions thereof; (6) The audited annual financial report and solvency report of the company in the past three years and the financial report and solvency report at the end of the recent quarter; (7) The total amount of unpaid subordinated debts that have been collected and the use of the fund collected; (8) The subordinated debts management plan made by the raiser; (9) Other important contracts in relation to the collection of the subordinated debts; and (10) Other materials that shall be provided required by the CIRC. Where an insurance company has made credit rating on the subordinated debts collected this time, it shall also submit the credit rating report of the subordinated debts. Article 16. A raiser shall report the collection conditions to the CIRC within 10 workdays after the end of the collection of the subordinated debts, and submit the photocopy of the subordinated debt contract concluded with the creditors of the subordinated debts to the CIRC. Article 17. No subordinated debts may be redeemed ahead of schedule, unless otherwise specified by the CIRC. CHAPTER III REPAYMENT OF DEBTS Article 18. An insurance company may repay the principals and interests of any subordinated debts only under the condition that it can ensure that the solvency adequacy ratio after repayment of the principals and interests shall be no less than 100%. Article 19. In case there is necessity to postpone any subordinated debts, the raiser shall put forward a proposal on the time limit for the deferment, adjustment of interest rate, and other matters concerned, and win consent of the creditor of the subordinated debts. The raiser shall report the deferment conditions to the CIRC within 5 workdays after signing deferment agreement with the creditor of the subordinated debts, and submit the photocopy of the text of the relevant contracts to the CIRC. Article 20. The raiser shall make management on the funds of subordinated debt collection in a special account, and use the funds collected strictly in accordance with the use of the funds collected in the feasibility study report and the subordinated debt management plan. Article 21. No raiser may distribute profits to any shareholder during the period that it/he fails to repay the principals and interests of the subordinated debts on schedule. CHAPTER IV INFORMATION DISCLOSURE Article 22. The relevant provisions of the CIRC shall be complied with for the contents and making and promulgation of such information disclosure documents as the subordinated debts prospectus, special topic financial report and notice of major matters concerned, etc. Article 23. An insurance company shall make prospectus and other information disclosure documents in accordance with the relevant provisions of the CIRC for collection of subordinated debts, and ensure that all the information that has material influence to the collective objects be disclosed truthfully, accurately, completely and timely. But no information may be published in the media openly or in disguised form. No raiser or relevant parties concerned may mislead any investor in any way to purchase any subordinated debts. Article 24. A raiser shall give indication to the investor in the eye-catching place of the prospectus: "An investor shall, when purchasing the current subordinated term debts, carefully read this prospectus and the relevant information disclosure documents, and make independent investment judgment. The approval of China Insurance Regulatory Commission for the collection of the current subordinated term debts does not indicate that it has made any appraisal on the investment value of the current debts, nor does it indicate that it has made any judgment on the investment risk of the current debts". Article 25. A raiser shall clarify in the collection clause of the prospectus: (1) The raiser cannot repay the principals and interests of the subordinated debts until it can ensure that the solvency adequacy ratio be no less than 100% after such repayment; (2) The creditor does not have the right to apply to the court for implementation of bankruptcy and repayment to the raiser if the raiser is unable to pay interests or repay principals on time; and (3) After the raiser enters into bankruptcy liquidating procedures according to law, the order of repayment of the principals and interests of the subordinated debts shall rank after all the non-subordinated debts. Article 26. The collection clause in the prospectus shall be concrete and clear, and shall fully disclose the provisions on the collection, redemption, deferment of the subordinated debts and the repayment of principals and interests of the present Measures to the investors, and specify the rights and obligations of both parties of the subordinated debts. The contents of the stipulated clauses may not violate laws and administrative regulations and the mandatory provisions of the CIRC. The prospectus shall at least include the following contents: (1) The scale, time limit (starting time and termination time), interests rate and object of the collection of the subordinated debts; (2) The use of the fund raised; (3) The legal conditions, time, procedures and ways for repayment of principals and interests; (4) The transfer and redemption ahead of schedule of the subordinated debts; (5) The liabilities of the raiser and creditor of the subordinated debts for breach of contract; and (6) Intermediary institutions and their liabilities. In case any raiser has made credit rating on the collection of the current subordinated debts, such contents as the credit rating report and arrangement for follow-up rating shall also be included in the prospectus. Article 27. During the existence of the subordinated debts, the raiser shall disclose the subject financial report of the subordinated debts in the previous year to the creditor of the subordinated debts within 4 months after the end of each fiscal year. The report shall at least include the following contents: (1) The audited financial statements; (2) The audited solvency quotas statement, the computation sheet for the minimum solvency quotas, the recognized assets statement and the recognized liabilities statement; (3) The payment of the principals and interests of the debts; (4) The use of the fund collected; (5) The major investment and affiliated transactions that influence the repayment of the principals and interests of the subordinated debts; and (6) Other information that has great influence on the creditor of the subordinated debts. In case the raiser has made follow-up rating, the follow-up rating shall also be included in. Article 28. In case a raiser occurs any of the following circumstances, the creditor of the subordinated debts shall be notified in time: (1) There occurs a great unfavorable alteration in its solvency status; (2) It is estimated that it is difficult to repay the interests or principal of the subordinated debts due; (3) Signing of guaranty contract and other important contracts that may have great influence on the repayment of principals and interests of the subordinated debts; (4) Occurring great losses or incurring great losses exceeding more than 10% of the net assets; (5) Occurring major arbitration and litigation; (6) Decreasing of capital, merging, dividing, dissolving and applying for bankruptcy; or (7) Planning to make major reorganization of debts. CHAPTER V SUPERVISION AND ADMINISTRATION Article 29. For any insurance company that violates the provisions of the present Measures, the CIRC may order it to correct within a prescribed time limit or take the following supervision measures according to the circumstances: (1) Ordering to dismiss and replace the senior management personnel of the insurance company who are directly liable and other personnel directly liable; (2) Not accepting the application of the insurance company for the collection of subordinated debts any longer within three years; (3) Suspending the determination of the amount of subordinated debts that may be reckoned in the attached capital of the insurance company; (4) Forming rectification organization according to law to make rectification on the insurance company. Article 30. In case any insurance company violates the provisions of the present Measures, impairs public interests, and may seriously endanger or has endangered its solvency, the CIRC may take over the insurance company according to law. Article 31. In case any insurance company and its senior management personnel directly liable and other personnel directly liable violate the provisions of the present Measures, the CIRC shall give them warnings, impose a fine of RMB 5,000 Yuan up to RMB 30,000 Yuan singly or concurrently. If any of them is suspected of committing a crime, it/he shall be transferred to the judicial department and subject to criminal liabilities according to law. CHAPTER VI SUPPLEMENTARY PROVISIONS Article 32. The power to interpret and revise the present Measures shall remain with the CIRC. Article 33. The present Measures shall come into force as of the date of promulgation. |
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