On July 8th 2008, the China Insurance Regulatory Commission (CIRC) promulgated the Guidelines on the Operation of the Board of Directors of Insurance Companies (the Guidelines) whose provisions are, compared with the Guiding Opinion on Regulating the Corporate Governance of Insurance Companies promulgated in 2006, more specific in many aspects such as in the qualification of directors, the operation of directors board and its professional committee, secretary and assistant institutions of the directors board and corporate governance reports. The Guidelines, together with the Interim Measures for the regulation of Insurance Companies’ Independent Directors and the Interim Measures for the regulation of Affiliate Transaction of Insurance Companies, compose the primary system regulating the board of directors of insurance companies.

The Guidelines, Main Points:

First, the Guidelines explicitly stipulate the procedures and contents of due diligence evaluation of directors, requiring the board of directors to submit a due diligence report of directors to the general assembly of shareholders and the board of supervisors each year. Additionally, in order to timely know the situation of remuneration, and to guide the administration on the remuneration of directors and managers thereof, the Guidelines require the insurance company to disclose relevant information to the CIRC in its corporate governance report.

Second, the Guidelines focus on the meetings rules of the board of directors, regulating the whole process of the meetings of the board of directors, including the convening and presiding, proposal and notice, record and its preservation and requires the qualifications and duties of directors and the secretary of the board of directors to be explicitly stated.

Third, the Guidelines brings introduces outside supervision by requiring the supervision of the CIRC, the report of meetings, the attendance of observers as non-voting delegates and the report of the corporate governance.

The purpose of the Guidelines is to enhance the construction of the board of directors, regulate there operation, improving decision-making quality of and promote good corporate governance of insurance companies.

With the improvement of regulation of insurance companies in China, the CIRC has issued more and more specific regulations and rules on insurance company. Presently speaking, the prevention of risk is emphasized as a regulatory focus of the CIRC at the background of the financial crisis in US. Therefore the corporate governance of the insurance company, including the board of directors, has become a vital field for the CIRC.