The regulation of corporate governance structures is the latest and most important development to the international regulation. For the purpose to strengthen the insurance industry in China and in the light of international experience, China Insurance Regulatory Commission (CIRC) promulgated the Guiding Opinion on Regulating the Insurance Company Corporate Governance Structure ( Trial Implementation) (Guiding Opinion on 5 January 2006. This Guiding Opinion is applicable to shareholding insurance companies. Other insurance companies and insurance asset management companies may also refer to this Guiding Opinion for implementation. The main contents of this Guiding Opinion are as follows: 1),strengthen majority shareholder obligations; 2), strengthen Board of Directors construction functions; 3),ensure Supervisory Board Function;4) regulate management level operation; 5),strengthen affiliated transaction and information disclosure management; and 6) corporate governance structure supervision and administration.
Majority shareholder having significant influence on an insurance company’s operation and management must have excellent financial conditions and continuous investment capabilities, must support the insurance company in improving its solvency, and must not use its special positions to damage the lawful rights and interest of the insurance company, the insured, the minority shareholders and other interest parties.
Where the insurance company’s shareholders are in an affiliate relationship with one another, they must take the initiative to report this to the Board of Directors. The insurance company must report its shareholders’ affiliated relationship to CIRC on a timely basis.
Continue Reading Regulations of Corporate Governance Structure of Insurance Companies