Administration of Representative Offices in China of Foreign Insurance Institutions Procedures

Repealed on July 12 2006: http://www.chinalawandpractice.com/Article/1690367/Measures-for-the-Administration-of-Resident-Representative.html

(Promulgated by the China Insurance Regulatory Commission on January 15 2004 and effective as of March 1 2004.)

PART ONE: GENERAL PROVISIONS

Article 1: These Procedures have been formulated in accordance with the PRC Insurance Law, in order to strengthen the administration of Representative Offices of foreign insurance institutions in China (hereafter, Representative Offices), and to accommodate the requirements of China's opening up of its insurance market.

Article 2: For the purposes of these Procedures, the term "foreign insurance institutions" means foreign insurance companies, reinsurance companies, insurance intermediaries, insurance associations and other insurance organizations registered outside China.

"Representative Offices" means Representative Offices or general Representative Offices of foreign insurance institutions approved to be established in China to conduct non-business activities such as liaison, market research, etc.

"Chief representative" means the principal responsible person of a Representative Office; and "general representative" means the principal responsible person of a general Representative Office.

Article 3: Representative Offices shall comply with the laws and regulations of China, and relevant provisions of the China Insurance Regulatory Commission (hereafter, the CIRC).

The lawful rights and interests of Representative Offices are protected by the laws of China.

Article 4: The CIRC is authorized by law and the State Council to perform regulatory duties over Representative Offices.

Branches of the CIRC shall, within the scope authorized by the CIRC, carry out day-to-day regulation of Representative Offices within their jurisdiction on behalf of the CIRC.

PART TWO: APPLICATION AND ESTABLISHMENT

Article 5: Foreign insurance institutions applying to establish Representative Offices (hereafter, "Applicants") shall comply with the following conditions:

(1) good business performance;

(2) no record of any grave violations of laws or regulations in the three years prior to the application date; and

(3) other prudential conditions as stipulated by the CIRC.

Article 6: The official application form for the establishment of Representative Offices shall be provided by the CIRC.

Article 7: The Applicant shall submit the following material:

(1) official application form;

(2) application letter addressed to the chairman of the CIRC, and signed by the chairman of the board of directors or the general manager;

(3) photocopy of the business licence or lawful proof of commencement of business or proof of registration issued by the relevant competent authority of the Applicant's home country or region;

(4) articles of association, and lists of members of the board of directors, management personnel or major partners;

(5) annual reports for the three years prior to the application date;

(6) opinion issued by the relevant competent authority of the Applicant's home country or region regarding the Applicant's establishment of a Representative Office in China, or letter of recommendation issued by the relevant industry association. Such opinion or letter of recommendation shall refer to the Applicant's record of penalties received for the three years prior to the date of issue of the opinion or letter of recommendation;

(7) power of attorney of the chief representative signed by the chairman of the board of directors or the general manager;

(8) r¨¦sum¨¦ and relevant supporting documents of the proposed chief representative; and

(9) other material as stipulated by the CIRC for submission.

The photocopies of the "business licence", "lawful proof of commencement of business" and "proof of registration" shall have been notarized by a lawfully established notary public in the Applicant's home country or region, or authenticated by the Chinese embassy or consulate in the said country or region.

Article 8: The Applicant shall submit the application material to the CIRC. The CIRC shall handle different applications for proposed establishment of Representative Offices according to the following circumstances:

(1) if a mistake in the application material may be corrected on the spot, the Applicant shall be permitted to correct the mistake on the spot;

(2) if the application material is incomplete or does not comply with statutory formats, the Applicant shall be notified at one time of all the required corrections on the spot or within five days. If the Applicant has not been notified within the above period, the application shall be deemed accepted for review on the day the application material is received; or

(3) if the application material is complete and complies with statutory formats, or where the Applicant has subsequently submitted and corrected all the application material in accordance with relevant requirements, the application shall be accepted for review.

The CIRC shall issue a written verification document, with its designated seal affixed and date indicated, on whether or not to accept the application for review.

Article 9: Within 20 days of the acceptance for review of the application, the CIRC shall render a decision on whether or not to approve the application. If such decision cannot be rendered within the said 20 days, with the approval of the chairman of the CIRC, the said period may be extended for 10 days and the Applicant shall be notified of the reason for the extension.

If the application is approved, an approval letter shall be issued. If the application is not approved, a written explanation shall be provided.

Article 10: Upon receipt of the approval letter, the Representative Office shall, in accordance with relevant stipulations, carry out industry and commerce registration.

Within three months of the receipt of the approval letter, the Representative Office shall settle in permanent office premises. If the Representative Office has not settled in permanent office premises after the said three-month period, the original approval letter shall automatically become void.

Article 11: Foreign insurance institutions that have established more than two Representative Offices in China may apply to the CIRC to designate one of these Representative Offices as the general Representative Office.

Article 12: Foreign insurance institutions that apply for designation of a general Representative Office shall submit an application letter addressed to the chairman of the CIRC and signed by the chairman of the board of directors or the general manager.

The procedure for the establishment of general Representative Offices shall be the same as that for the establishment of Representative Offices.

PART THREE: REGULATION

Article 13: The name of a Representative Office shall contain, in order, the following contents: "name of the foreign insurance institution", "name of the city where it is located" and "Representative Office". The name of a general Representative Office shall contain, in order, the following contents: "name of the foreign insurance institution" and "general Representative Office in China".

Article 14: Except for the principal responsible person, other major employees of a Representative Office shall be known as "representative" or "vice representative".

Article 15: Employees of a Representative Office shall comply with the laws and regulations of China, be of good conduct, and have a clean record.

Article 16: A general representative shall have at least eight years of work experience, and be at least an associate degree holder. A chief representative shall have at least five years of work experience, and be at least an associate degree holder.

Where the general representative and chief representative do not hold at least an associate degree, they shall have at least 10 years of work experience in the insurance business.

Article 17: Each Representative Office shall have not more than three employees who are of foreign nationality.

Article 18: Representative offices and their employees shall not sign any agreements or contracts with any legal or natural persons, which agreements or contracts may result in income for the Representative Offices or the foreign insurance institutions they represent, nor shall they engage in any business activities.

Article 19: Representative offices shall have independent and permanent office premises, and full-time employees.

Article 20: General representatives or chief representatives shall not be employed in two or more Representative Offices, nor shall they be employed by any business organizations in China.

Article 21: The general representative or chief representative shall ordinarily be at the Representative Office to direct day-to-day work. If the general representative or chief representative is away from the Representative Office continuously for one month or more, he shall designate another person to carry out his duties and a written report shall be submitted to the CIRC branch office at the locality.

Article 22: Representative offices shall, before the end of February each year, submit a work report of the previous year in duplicate to the CIRC branch office at the locality. The CIRC branch office shall then submit such report to the CIRC.

The work report shall be filled in according to the format as stipulated by the CIRC.

Article 23: Each year, Representative Offices shall, within six months following the end of the financial year of the foreign insurance institutions they represent, submit the annual report of the previous year of the foreign insurance institutions they represent to the CIRC and the CIRC branch office at the locality separately.

Article 24: Where any of the following circumstances applies to the foreign insurance institution that a Representative Office represents, the Representative Office shall, within 10 days of the occurrence of the event, submit a written report to the CIRC and at the same time copy such report to the CIRC branch office at the locality:

(1) changes to company articles of association, registered capital or registered address;

(2) division or merger, or changes in major responsible persons;

(3) serious business loss;

(4) penalties as a result of violations of laws and regulations;

(5) serious regulatory measures are imposed on the foreign insurance institution by the relevant competent authority of its home country or region; or

(6) other matters that will have a material effect on the business.

Article 25: Where there is an alteration in the general representative or chief representative, the Representative Office shall submit an application to the CIRC, together with the following material:

(1) application letter addressed to the chairman of the CIRC and signed by the chairman of the board of directors or general manager of the foreign insurance institution it represents;

(2) power of attorney of the proposed general representative or chief representative signed by the chairman of the board of directors or general manager of the foreign insurance institution it represents; and

(3) proof of identification, proof of academic qualifications and r¨¦sum¨¦ of the proposed general representative or chief representative.

Article 26: To cancel a Representative Office, an application shall be made to the CIRC by the Representative Office, and the Representative Office shall submit an application letter addressed to the chairman of the CIRC and signed by the chairman of the board of directors or general manager of the foreign insurance institution it represents.

Article 27: In the event of a change of name of the Representative Office, an application shall be made to the CIRC, and an application letter addressed to the chairman of the CIRC and signed by the chairman of the board of directors or general manager of the foreign insurance institution that the Representative Office represents, together with relevant evidence pertaining to the change of name shall be submitted.

Article 28: Where a Representative Office submits applications to the CIRC under any of the circumstances stipulated in Article 25, Article 26 and Article 27, the CIRC shall render a decision on whether or not to approve the application within 20 days from the date of receipt of the complete set of application materials.

If the application is approved, an approval letter shall be issued. If the application is not approved, a written explanation shall be provided.

Article 29: Representative offices may only change their office addresses within the administrative region of the city in which they reside.

The Representative Offices shall, within five days from the date of their change of office address, report to the CIRC branch office at the locality and advise their new office telephone and facsimile numbers.

Article 30: In the event of a Representative Office replacing, or increasing or reducing the number of, representatives, vice representatives or foreign employees, a report shall be submitted to the CIRC branch office at the locality, together with the proof of identification, proof of academic qualification and r¨¦sum¨¦ of the persons being appointed within five days from the date of replacement, addition or reduction.

Article 31: Where a Representative Office is approved to be changed to a general Representative Office, the former Representative Office shall be automatically cancelled. The general Representative Office shall carry out industry and commerce deregistration of the Representative Office within one month from the date of the CIRC's approval of change.

Article 32: If the general Representative Office of a foreign insurance institution becomes its only Representative Office in China after the cancellation of its Representative Office, the general Representative Office shall be changed into a Representative Office.

The general Representative Office shall apply to the CIRC regarding such change and shall submit an application letter signed by the chairman of the board of directors or general manager of the foreign insurance institution it represents. The CIRC shall render a decision on whether or not to approve the application within 20 days from the date of receipt of the application. If the application is approved, an approval letter shall be issued. If the application is not approved, a written explanation shall be provided.

Where the general Representative Office is approved to be changed to a Representative Office, the former general Representative Office shall be automatically cancelled. The Representative Office shall carry out industry and commerce deregistration of the general Representative Office within one month from the date of the CIRC's approval of change.

Article 33: After cancellation of a Representative Office, if the foreign insurance institution it represents has a general Representative Office in China, the general Representative Office shall be responsible for any uncompleted matters; if there is no general Representative Office, other Representative Office(s) of the foreign insurance institution shall be responsible for any uncompleted matters; and if all of the Representative Offices of the foreign insurance institution have been cancelled, the foreign insurance institution itself shall be responsible for any uncompleted matters.

Article 34: The CIRC and its branch offices shall carry out day-to-day and annual inspections on Representative Offices according to law.

The day-to-day and annual inspections shall include:

(1) whether or not the procedures for changes of Representative Offices are complete;

(2) whether or not the contents of various application material conform to the actual circumstances;

(3) whether or not the procedures for the appointments or changes of employees of Representative Offices are complete;

(4) whether or not Representative Offices engage in business activities; and

(5) other matters that require inspection, as stipulated by the CIRC or its branch offices.

PART FOUR: LEGAL LIABILITY

Article 35: Where a Representative Office is established, in violation of these Procedures, without approval, it shall be banned by the CIRC in accordance with law.

Article 36: If a Representative Office engages in insurance business activities in violation of the provisions hereof, it shall be punished by the CIRC in accordance with the provisions of relevant laws and regulations. If a Representative Office engages in business activities other than insurance business, it shall receive a warning from the CIRC and, if the circumstances are serious, a fine not exceeding Rmb30,000 shall be imposed.

Article 37: If a Representative Office fails to submit reports or material required by Article 22, Article 23 and Article 24 hereof, it shall receive a warning from the CIRC branch office and be ordered to make rectifications.

Article 38: Employees of a Representative Office who are directly responsible for activities violating these Procedures shall, according to the seriousness of the circumstances, receive a warning, or a fine not exceeding Rmb5,000, or the fine together with the warning, from the CIRC.

Article 39: If a Representative Office provides false information or conceals material facts, it shall receive a warning.

Article 40: Rectifications shall be ordered to be made for activities violating other provisions hereof. If the rectifications have not been completed within the prescribed time period, a warning shall be given.

PART FIVE: SUPPLEMENTARY PROVISIONS

Article 41: These Procedures shall, mutatis mutandis, apply to establishment of Representative Offices in the Mainland by insurance institutions from the Hong Kong and Macao Special Administrative Regions and the Taiwan region.

Article 42: These Procedures shall, mutatis mutandis, apply to resident offices in China of foreign insurance institutions approved to be established by the CIRC.

Article 43: For the purposes of theses Procedures, the terms "above", "below" and "within" shall include the number itself.

Article 44: For the purposes of these Procedures the approval and reporting periods refer to working days, and do not include non-working days and public holidays.

Article 45: The CIRC is responsible for the interpretation of these Procedures.

Article 46: These Procedures shall be effective as of March 1 2004. The Administration of Representative Offices in China of Foreign-invested Insurance Institutions Procedures promulgated by the CIRC on November 26 1999 is simultaneously repealed.

1 Translation provided by Boss & Young, Attorneys at Law, Shanghai. All rights reserved.