Measures for the Administration of Resident Representative Organizations in China of Foreign Insurance Institutions

(Promulgated by the China Insurance Regulatory Commission on July 12 2006 and effective as of September 1 2006.)

Order of the CIRC No.5

PART ONE: GENERAL PROVISIONS

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

Article 2: For the purposes of these Measures, the term “foreign insurance institution” means an insurance company, reinsurance company, insurance intermediary, insurance association or another insurance organization registered outside China.

For the purposes of these Measures, the term “Representative Organization” means a representative office or a general representative office of a foreign insurance institution approved to be established in China to conduct non-business activities such as liaison, market surveys and others.

For the purposes of these Measures, the term “chief representative” means the principal responsible person of a representative office, and the term “general representative” means the principal responsible person of a general representative office.

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

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

Article 4: The CIRC is authorized by law and the State Council to perform regulatory duties in respect of Representative Organizations.

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

PART TWO: APPLICATION AND ESTABLISHMENT

Article 5: A foreign insurance institution applying to establish a representative office (Applicant) shall meet the following conditions:

(1) having good business performance;

(2) if the foreign insurance institution conducts insurance business, it shall have conducted such insurance business for at least 20 years; or if the foreign insurance institution does not conduct insurance business, it shall have been established for at least 20 years;

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

(4) other prudential conditions prescribed by the CIRC.

For the purposes of these Measures, the term “have conducted insurance business for at least 20 years” means that the foreign insurance institution has continuously conducted insurance business for at least 20 years. If the foreign insurance institution has acquired or merged with another organization, or established a new insurance institution with another organization, the calculation of the number of years conducting insurance business shall not be affected.

The number of years of conducting insurance business by a subsidiary of a foreign insurance institution shall be counted starting from the date of establishment of such subsidiary.

The number of years of conducting insurance business by a foreign insurance group shall be counted starting from either of the following dates, whichever is the earlier:

(1) the date the group started to conduct insurance business; or

(2) the date the subsidiary of the group that conducts insurance business started to conduct insurance business.

Article 6: The applicant shall submit the following materials:

(1) the official application form;

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

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

(4) the articles of association, and a list of members of the board of directors, management personnel or principal partners;

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

(6) an opinion issued by the relevant competent authority of the applicant's domicile country or region regarding the applicant's establishment of a representative office in China, or a letter of recommendation issued by its industry association. Such opinion or letter of recommendation shall mention 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) a feasibility and necessity study report regarding the establishment of the Representative Organization;

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

(9) a declaration by the applicant that the proposed chief representative has not been subjected to penalties in his/her domicile country or region due to a grave violation of laws or regulations in the three years prior to the application date;

(10) the résumé of the proposed chief representative; and

(11) other materials prescribed for submission by the CIRC.

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

Article 7: The applicant shall submit the application material to the CIRC. The CIRC shall handle the different applications for the proposed establishment of representative offices according to the following circumstances:

(1) if a mistake that may be corrected at the time of submission is found in the application materials, the applicant shall be permitted to correct the mistake immediately;

(2) if the application materials are incomplete or do not comply with statutory formats, the applicant shall be notified once of all the required supplements and/or corrections at the time of submission or within five days. If the applicant has not been notified within the above period, the application shall be deemed accepted on the day the application materials are received; or

(3) if the application materials are complete and comply with statutory formats, or if the applicant has supplemented and/or corrected all the application materials as required, the application shall be accepted.

The CIRC shall issue a written document, with its designated stamp affixed and date indicated, on whether or not the application is accepted.

Article 8: The CIRC shall review the application for establishment of a representative office in accordance with the principle of prudence and shall, within 20 days of acceptance of the application, render a decision on whether or not to approve the application. If the decision cannot be rendered within 20 days, with the approval of the chairman of the CIRC, the 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 9: Upon receipt of the approval letter, the representative office shall, in accordance with relevant provisions, carry out industry and commerce registration.

The representative office shall, within three months of receipt of the approval letter, settle in permanent office premises, and shall submit to the CIRC a written report regarding the following matters:

(1) proof of industry and commerce registration;

(2) proof of the lawful right to use the office premises;

(3) the telephone number, the facsimile number and the postal address of the office premises; and

(4) the mobile telephone number and the email address of the chief representative.

If the representative office has not submitted the written report to the CIRC within three months of the receipt of the approval letter, it shall be deemed that the representative office has not settled in permanent office premises and the approval letter shall automatically become void.

PART THREE: REGULATION

Article 10: The name of a representative office shall contain, in order, the following: “name of the domicile country or region of the foreign insurance institution”, “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: “name of the domicile country or region of the foreign insurance institution”, “name of the foreign insurance institution” and “general representative office in China”.

Article 11: Except for the principal responsible person, other major employees of a Representative Organization shall be known as “representatives” and “deputy representatives”.

Article 12: Employees of a Representative Organization shall comply with the laws and regulations of China, be of good conduct, and have no record of grave violations of laws or regulations.

Article 13: A general representative and a chief representative shall have the academic qualifications, work experience and work ability necessary for the performance of their duties.

The general representative shall have at least eight years of work experience and an associate's degree. A chief representative shall have at least five years of work experience and an associate's degree.

If the general representative or the chief representative does not hold at least an associate degree, he/she shall have at least ten years of work experience in the insurance industry.

Article 14: Each Representative Organization shall have no more than three foreign employees.

Article 15: A Representative Organization and its employees shall not, in any manner whatsoever, conduct or take part in any business activities.

Article 16: A Representative Organization shall have independent and permanent office premises, and full-time employees.

Article 17: A general representative or a chief representative may not be employed in two or more Representative Organizations, nor may they be employed by any business organizations in China.

Article 18: A general representative or a chief representative shall be resident at the Representative Organization to take charge of day-to-day work, and such resident period shall be no less than 240 days in aggregate each year.

The general representative or the chief representative shall not be absent from the Representative Organization for a continuous period of more than 30 days each time. If the general representative or the chief representative is absent from the Representative Organization continuously for more than 14 days, he/she shall designate a particular person to carry out his/her duties and submit a written report to the local CIRC branch office.

Article 19: A Representative Organization shall, before the end of February each year, submit a work report of the previous year in duplicate to the local CIRC branch office. The CIRC branch office shall then submit the report to the CIRC.

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

Article 20: Each year, a Representative Organization shall, within six months after the end of the financial year of the foreign insurance institution that it represents, submit the annual report of the previous year of the foreign insurance institution that it represents to the CIRC and the local CIRC branch office separately.

Article 21: If any of the following circumstances applies to the foreign insurance institution that a Representative Organization represents, the Representative Organization 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 local CIRC branch office:

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

(2) a division or a merger, or changes to the principal responsible persons;

(3) a serious business loss;

(4) penalties imposed as a result of a violation of laws or regulations;

(5) serious regulatory measures imposed by the relevant competent authority of the foreign insurance institution's domicile country or region; or

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

Article 22: If a Representative Organization changes its general representative or chief representative, it shall submit an application to the CIRC, together with the following materials:

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

(2) a power of attorney of the proposed general representative or chief representative signed by the chairman of the board of directors or the general manager of the foreign insurance institution that the Representative Organization represents;

(3) proof of identification, proof of academic qualifications and r?um?of the proposed general representative or chief representative; and

(4) other materials prescribed by the CIRC.

Article 23: If a Representative Organization changes its name, it shall submit an application to the CIRC, together with the following materials:

(1) an application form for the change of name;

(2) an application letter addressed to the chairman of the CIRC and signed by the chairman of the board of directors or the general manager of the foreign insurance institution that the Representative Organization represents; and

(3) other materials prescribed by the CIRC.

Article 24: A foreign insurance institution having two or more representative offices in China may designate one of these representative offices as its general representative office, but shall apply, in accordance with Article 23 hereof, to the CIRC to change the name of the representative office to general representative office.

If the representative office has been approved to be changed to a general representative office, the general representative office shall, within one month from the date of the CIRC's approval of the change, amend the industry and commerce registration of the representative office in accordance with the law.

Article 25: If a Representative Organization changes its general representative or chief representative or changes its name and submits an application therefor to the CIRC in accordance with these Measures, the CIRC shall, within 20 days of acceptance of the application, render a decision on whether or not to approve the application.

If the application is approved, an approval letter shall be issued. If the application is not approved, a decision shall be made in writing and the reasons shall be explained.

Article 26: A Representative Organization may only change its office premises within the administrative region of the city in which it resides, and shall, within five days from the date of such change, submit to the CIRC and the local CIRC branch office a written report of the following matters:

(1) proof of the lawful right to use the new office premises; and

(2) the telephone number, facsimile number and postal address of the new office premises.

For the purposes of these Measures, the term “a change to office premises” includes the moving, expansion and reduction in size of the original office premises as well as the addition of new office premises.

Article 27: A Representative Organization that has been cancelled shall, within twenty days from the date of cancellation, submit to the CIRC a written report of the following matters:

(1) an explanation of the cancellation of the Representative Organization; and

(2) a photocopy of the document from the foreign insurance institution cancelling the Representative Organization.

Article 28: If a Representative Organization replaces, or increases or reduces the number of, its representatives, deputy representatives or foreign employees, it shall, within five days from the date of replacement, addition or reduction, submit a report to the local CIRC branch office, together with the proof of identification, proof of academic qualifications and r?um? of the persons being appointed.

Article 29: If the general representative office of a foreign insurance institution becomes its only Representative Organization in China after the cancellation of its representative office, the general representative office shall, in accordance with Article 23 hereof, apply to the CIRC to change its name to representative office.

If the general representative office has been approved to be changed to a representative office, the representative office shall, within one month from the date of the CIRC's approval of the change, amend its industry and commerce registration in accordance with the law.

Article 30: After the cancellation of a representative office, if the foreign insurance institution that 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. If all of the Representative Organizations of the foreign insurance institution have been cancelled, the foreign insurance institution itself shall be responsible for any uncompleted matters.

Article 31: The CIRC or its branch office at the locality may, for regulatory purposes, hold regulatory discussions with the general representative or the chief representative of a Representative Organization, point out the risks and request that an explanation be provided on relevant issues.

Article 32: The CIRC and its branch offices shall, in accordance with the law, conduct day-to-day and annual inspections on Representative Organizations.

Day-to-day and annual inspections shall include:

(1) whether or not the procedures for changes in the Representative Organization have been completed;

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

(3) whether or not the procedures for the appointment or change of employees of the Representative Organization have been completed;

(4) whether or not the Representative Organization engages in business activities; and

(5) other matters the inspection of which the CIRC or its branch office deems necessary..

PART FOUR: LEGAL LIABILITY

Article 33: If a Representative Organization is established without approval, in violation of these Measures, it shall be banned by the CIRC in accordance with the law.

Article 34: Those engaging in insurance business activities in violation of these Measures shall be punished by the CIRC in accordance with relevant laws and regulations.

Article 35: If a Representative Organization fails to submit relevant reports or materials in accordance with these Measures, the CIRC or the local CIRC branch office shall order it to rectify the same within a prescribed time limit, give it a warning and, if the circumstances are serious, impose a fine of Rmb1,000.

Article 36: For employees of a Representative Organization who are directly responsible for the insurance business activities of the Representative Organization that are in violation of these Measures, the CIRC shall give them a warning and, if the circumstances are serious, impose a fine of not more than Rmb5,000. For employees of a Representative Organization who are directly responsible for other non-business activities of the Representative Organization that are in violation of these Measures, the CIRC shall give them a warning and, if the circumstances are serious, impose a fine of not more than Rmb1,000.

Article 37: If a Representative Organization provides false information or conceals material facts, it shall receive a warning.

Article 38: If other provisions of these Measures are violated, rectification shall be ordered. If the rectification is not made within the prescribed time limit, a warning shall be given.

Article 39: Local CIRC branch offices shall report to the CIRC in a timely manner penalties imposed on Representative Organizations.

If a Representative Organization has been subjected to administrative penalties imposed by the CIRC or the local CIRC branch office three times or more, or the amount of its unlawful proceeds from conducting or taking part in business activities is significant, and there are grave consequences thereof, the CIRC may take such subjection to penalties into account when examining the prudential conditions required for the application to establish a foreign-invested insurance company in China made by the foreign insurance institution that the Representative Organization represents.

PART FIVE: SUPPLEMENTARY PROVISIONS

Article 40: These Measures shall, mutatis mutandis, apply to the establishment of Representative Organizations on the mainland by insurance institutions from the Hong Kong, Macao and Taiwan regions.

Article 41: These Measures shall, mutatis mutandis, apply to resident offices in China of foreign insurance institutions approved to be established by the CIRC.

Article 42: The official application form for the establishment of a representative office by a foreign insurance institution and the application form for a change to the name of a Representative Organization shall be provided by the CIRC.

Article 43: For the purposes of these Measures, the words “above”, “below” and “within” shall include the number itself.

Article 44: Materials required to be submitted under these Measures shall be in Chinese. If the materials provided by the domicile country or region of a foreign insurance institution are in a foreign language, a Chinese translation shall be attached therewith. If there is inconsistency between the Chinese translation and the foreign language version, the Chinese translation shall prevail.

Article 45: For the purposes of these Measures, the approval and reporting periods refer to working days and do not include public holidays.

Article 46: The CIRC is responsible for the interpretation of these Measures.

Article 47: These Measures shall be effective as of
September 1 2006. The Measures for the Administration of Resident Representative Organizations in China of Foreign Insurance Institutions promulgated by the CIRC on January 15 2004 shall be simultaneously repealed.

* This is an edited version of the translation produced by Boss & Young, Attorneys at Law. ?Euromoney Institutional Investor (Jersey) Ltd 2007