Provisions for the Administration of Insurance Companies

(Promulgated by the China Insurance Regulatory Commission on September 25 2009 and effective as of October 1 2009.)

Order of the CIRC [2009] No.1

Part One: General provisions

Article 1: These Provisions have been formulated pursuant to laws and administrative regulations such as the PRC Insurance Law(Insurance Law) and the PRC Company Law (Company Law) in order to strengthen the regulation of insurance companies, safeguard the normal order of the insurance market, protect the lawful rights and interests of the insured and promote the healthy development of the insurance industry.

Article 2: The China Insurance Regulatory Commission (CIRC) shall exercise centralised oversight over insurance companies pursuant to laws and as authorised by the State Council.

The agencies of the CIRC shall perform their oversight duties in accordance with the law to the extent authorised by the CIRC.

Article 3: For the purposes of these Provisions, the term “insurance company” means a commercial insurance company whose establishment was approved by the insurance regulator and that has been registered in accordance with the law.

For the purposes of these Provisions, the term “establishment of an insurance company” means a branch, central sub-branch, sub-branch, business office, marketing service office or other subordinate organisation lawfully established by an insurance company with the approval of the insurance regulator. The CIRC shall provide separately for the establishment and administration of subordinate organisations.

For the purposes of these Provisions, the term “insurance institution” means insurance companies and their establishments.

Article 4: For the purposes of these Provisions, the term “branch” means an establishment set up in the name of “branch” by an insurance company in accordance with the law.

For the purposes of these Provisions, the term “provincial-level branch” means the branch of an insurance company that, pursuant to CIRC regulatory requirements, is responsible for permit application, submission of reports and other such matters in a province, autonomous region or municipality directly under the central government. If an insurance company has established branches in a province, autonomous region or municipality directly under the central government other than the one in which it is domiciled, it shall designate one of them as its provincial-level branch.

If an insurance company has set up establishments in a city with independent development plans, it shall designate one of them that, pursuant to CIRC regulatory requirements, will be responsible for permit application, submission of reports and other such matters in the city with independent development plans.

If a provincial-level branch is established in a city with independent development plans, it shall concurrently be responsible for the matters specified in the preceding two paragraphs.

Article 5: Insurance business shall be engaged in by insurance companies established in accordance with the Insurance Law and by other insurance organisations specified in laws and administrative regulations. Other work units and individuals may not engage, or in a disguised manner engage, in insurance business.

Part Two: Establishment of organisations with legal personality

Article 6: To establish an insurance company, the following principles shall be complied with:

(1) compliance with laws and administrative regulations; and

(2) being conducive to fair competition in, and the healthy development of, the insurance industry.

Article 7: To establish an insurance company, an application for the preparation of establishment shall be submitted to the CIRC and the following conditions shall be satisfied:

(1) having (an) investor(s) that satisfy/satisfies the conditions specified in laws, administrative regulations and CIRC provisions, and a rational equity structure;

(2) having draft articles of association that comply with the Insurance Law and the Company Law;

(3) the investor(s) undertaking to make capital contributions or subscribe for shares, and having proposed registered capital of not less than Rmb200 million, which must be paid-in monetary capital;

(4) having a clear development plan, business strategy, organisational framework and risk control system;

(5) the proposed chairman of the board and general manager satisfying the conditions for the qualifications for their positions specified by the CIRC;

(6) having a person in charge of the preparatory committee approved by the investor(s); and

(7) other conditions as specified by the CIRC.

The CIRC may revise the minimum registered capital of insurance companies based on the scope of business and scale of business of insurance companies, provided that the same is not less than Rmb200 million.

Article 8: When applying for preparation to establish an insurance company, the applicant shall submit the following materials in triplicate:

(1) an application letter for establishment stating the name of the proposed insurance company and its proposed registered capital and scope of business, etc.;

(2) a feasibility study report on the establishment of the insurance company, covering its development plans, business strategy, organisational framework, risk control system, etc.;

(3) the preparatory plan;

(4) a draft of the insurance company's articles of association;

(5) the relevant materials that the CIRC requires investors to submit;

(6) a list of the names of the person in charge of the preparatory committee, the proposed chairman of the board and general manager, and approval documentation of such persons; and

(7) other materials as specified by the CIRC.

Article 9: The CIRC shall examine the application for preparation to establish an insurance company, render its decision on whether to grant or withhold its approval for the preparation for establishment and notify the applicant in writing within six months from the date of acceptance of the application. If it decides to withhold approval, it shall give the reasons therefor in writing.

Article 10: When examining the application for preparation to establish an insurance company, the CIRC shall give the investor(s) a risk alert.

The CIRC shall listen to the proposed chairman of the board's and general manager's thoughts on the operations, management, business development, etc. of the proposed insurance company.

Article 11: If approval is given by the CIRC for the preparation to establish an insurance company, the applicant shall complete the preparatory work within one year from the date of receipt of the notice approving the preparation for establishment. If the preparatory work is not completed by the expiration of the preparatory period, the decision approving the preparation for establishment shall automatically become null and void.

The organisation being prepared for establishment may not engage in insurance business activities during the preparatory period. The main investor(s) may not be changed during the preparatory period.

Article 12: If, after completion of the preparatory work, the following conditions are satisfied, the applicant may apply to the CIRC for the commencement of business:

(1) the shareholder(s) complying with laws, administrative regulations and relevant CIRC provisions;

(2) having articles of association that comply with the Insurance Law and the Company Law;

(3) having minimum registered capital of Rmb200 million, which must be paid-in monetary capital;

(4) having directors, supervisors and senior management personnel who satisfy the conditions for the qualifications for their positions specified by the CIRC;

(5) having a sound organisational structure;

(6) having established sound business, financial, compliance, risk control, asset management, anti-money laundering and other such systems;

(7) having a specific business development plan and medium- and long-term asset allocation plans formulated based on principles such as asset and liability matching;

(8) having a lawful place of business, security and fire safety facilities that comply with requirements, business premises, office equipment, etc. consistent with the business development plans and information systems that comply with CIRC requirements; and

(9) other conditions as specified in laws, administrative regulations and by the CIRC.

Article 13: When making its application to commence business, the applicant shall submit the following materials in triplicate:

(1) an application letter for the commencement of business;

(2) the resolution of the inaugural general meeting; in the absence of an inaugural general meeting resolution, the document or resolution of all of the shareholders giving approval to apply to commence business;

(3) the company's articles of association;

(4) the names of the shareholders and the percentages of the shares they hold or of their capital contributions, a capital verification certificate issued by a creditworthy capital verification institution and a photocopy of the original voucher evidencing that the capital has been credited to the account;

(5) relevant materials that the CIRC requires shareholders to submit;

(6) résumés and related supporting documentation of the company's proposed directors, supervisors and senior management personnel;

(7) the establishment of the company's departments and the basic personnel composition;

(8) documentation evidencing ownership of, or the right to use, the place of business;

(9) the relevant fire safety certificate submitted in accordance with the provisions of the place where the company is to be established;

(10) the plan for the types of insurance that are to be engaged in, a three-year business plan, reinsurance plan, medium and long-term asset allocation plans, as well as the business, financial, compliance, risk control, asset management, anti-money laundering and other such major systems;

(11) a report on the status of the information systems;

(12) the notice of preliminary approval of the company's name; and

(13) other materials the CIRC specifies be submitted.

Article 14: The CIRC shall examine the application for commencement of business, conduct an acceptance check on the commencement of business and render its decision on whether to grant or withhold approval for the commencement of business within 60 days from the date of acceptance of the application for the commencement of business. If the company passes the acceptance check and a decision to approve the commencement of business is rendered, a permit to engage in insurance business shall be issued. If the company fails the acceptance check and a decision to withhold approval of the commencement of business is rendered, the applicant shall be notified thereof in writing and the reasons therefor shall be given.

An insurance company that has been given approval to commence business shall carry out registration procedures with the administration for industry and commerce on the strength of the approval document and the permit to engage in insurance business. It may commence business only after it collects its business licence.

Part Three: Setting up of establishments

Article 15: An insurance company may, in line with its business development needs, apply to set up establishments.

The ranking of the establishments of insurance companies is, in descending order, as follows: branches, central sub-branches, sub-branches and business offices or marketing service offices. An insurance company may ignore the sequence when setting up establishments provided, however, that when it launches business in a province, autonomous region or municipality directly under the central government other than the one in which it is domiciled, it shall first establish a branch.

An insurance company may ignore the ranking order specified in the preceding paragraph in managing its establishments; however, business offices and marketing service offices may not manage any other establishments.

Article 16: If an insurance company is established with the minimum capital of Rmb200 million, it shall increase its registered capital by not less than Rmb20 million the first time it applies to establish a branch in any province, autonomous region or municipality directly under the central government other than the one in which it is domiciled.

If the registered capital of an insurance company that is applying to establish a branch is equivalent to the post capital increase amount specified in the preceding paragraph, it shall not be required to correspondingly increase its registered capital.

If an insurance company has registered capital of at least Rmb500 million and is fully solvent, it need not increase its registered capital to establish a branch.

Article 17: An application for the establishment of a provincial-level branch shall be submitted by the head office of the insurance company. For the setting up of other establishments, the application shall be submitted either by the head office of the insurance company or by the provincial-level branch on the strength of the head office's approval document.

When applying to set up an establishment in a city with independent development plans, the application may also be submitted by the establishment designated by the insurance company pursuant to the third paragraph of Article 4 hereof on the strength of the head office's approval document.

Article 18: When setting up an establishment, an application for establishment shall be submitted and the following conditions satisfied:

(1) being fully solvent during the previous financial year, and being fully solvent for two quarters in succession before the submission of the application;

(2) the insurance company having a good corporate governance structure and sound internal controls;

(3) the applicant having a sound system for the management of establishments;

(4) sufficient evaluation having been carried out on the feasibility of the proposed establishment;

(5) if the application is for an establishment, other than a provincial-level branch, to be established in a province, autonomous region or municipality directly under the central government other than the place of domicile, the relevant provincial-level branch having commenced operations;

(6) the applicant not having a record of a major administrative penalty having been imposed by the financial regulator during the most recent two years, and not being under investigation by the CIRC for suspicion of having committed a major violation of the law;

(7) if the application is for the setting up of an establishment other than a provincial-level branch, the provincial-level branch in the province, autonomous region or municipality directly under the central government where the establishment is proposed not having a record of a major administrative penalty having been imposed by the financial regulator during the most recent two years and the other establishments that have already been set up not having a record of having had major insurance administrative penalties imposed during the most recent six months;

(8) having a person in charge of preparation for establishment approved by the applicant; and

(9) other conditions as specified by the CIRC.

Article 19: When setting up an establishment, the applicant shall submit the following materials in triplicate:

(1) an application letter for establishment;

(2) a solvency report for the two consecutive quarters before the application and an audited solvency report for the previous financial year;

(3) a report on the insurance company's corporate governance structure for the previous financial year and the applicant's internal control systems;

(4) a report on the evaluation of the feasibility of setting up the establishment, including a three-year business development plan for the proposed establishment, a market analysis and an explanation showing that the setting up of the establishment is consistent with the company's risk management position and internal control situation;

(5) the applicant's system for the management of establishments;

(6) a declaration given by the applicant that it has not had a major administrative penalty imposed by the financial regulator during the most recent two years;

(7) if the application is for the establishment of an establishment other than a provincial-level branch, a declaration that the provincial-level branch has not had a major administrative penalty imposed by the financial regulator during the most recent two years;

(8) the résumé of the person in charge of the preparation for establishment of the proposed organisation and relevant supporting documentation; and

(9) other materials the CIRC specifies be submitted.

Article 20: The CIRC shall, within 30 days from the date of receipt of the complete set of application materials, carry out a documentary review of the application for establishment and render a decision withholding its approval and give a written explanation therefor if the application fails to comply with Article 18 hereof. If the application does comply with Article 18 hereof, a notice of preparation for establishment shall be issued to the applicant.

Article 21: The applicant shall complete the preparatory work for the setting up of the establishment within six months from the date of receipt of the notice of preparation for establishment. The preparatory period shall not be counted as part of the term of the administrative licensing.

If the preparatory work is not completed by the expiration of the preparatory period, a new application for establishment shall be submitted in accordance herewith.

The organisation being prepared for establishment may not engage in any insurance business activities during the preparatory period.

Article 22: If, after the completion of the preparatory work, the organisation being prepared for establishment satisfies the following conditions, the applicant may submit the acceptance check report on the commencement of business to the CIRC:

(1) having a lawful place of business, and security and fire safety facilities that comply with requirements;

(2) having established the necessary organisational structure and sound business, financial, risk control, asset management, anti-money laundering and other such management systems;

(3) having established information systems appropriate for the operation and management activities;

(4) having proposed senior management personnel or persons in charge who satisfy the conditions for their positions;

(5) having provided job preparation training to employees;

(6) not having engaged in insurance business during the preparatory period; and

(7) other conditions as specified by the CIRC.

Article 23: The acceptance check report on the commencement of business submitted by the applicant shall be accompanied by the following materials in triplicate:

(1) a report on the completion of the preparatory work;

(2) the résumé(s) of the proposed senior management personnel or persons in charge and relevant documentation;

(3) proof of ownership of, or the right to use, the place of business of the proposed organisation;

(4) a report on the deployment of computer equipment, and the construction of application systems and networks;

(5) business, financial, risk control, asset management, anti-money laundering and other such systems;

(6) reports on the establishment of organisations and details of the practising personnel, including a report on the job preparation training of employees;

(7) the relevant fire safety certificate submitted in accordance with the provisions of the place of establishment; if a fire safety acceptance check or record filing is not required, a written undertaking given by the applicant that it has taken all necessary measures to ensure fire safety; and

(8) other materials the CIRC specifies be submitted.

Article 24: Within 30 days from the date of receipt of a complete acceptance check report on the commencement of business, the CIRC shall conduct an acceptance check on the commencement of business and render a decision granting or withholding approval. If the acceptance check is passed and approval for establishment is granted, a permit for engagement in insurance business by an establishment shall be issued. If the acceptance check is failed and approval for establishment is withheld, the applicant shall be notified thereof in writing and given the reasons therefor.

Article 25: An establishment of an insurance company that has been approved to be set up shall carry out registration procedures with the administration for industry and commerce on the strength of the approval document and the permit for engagement in insurance business by an establishment. It may commence business only after it has collected its business licence.

Part Four: Change, dissolution and closing down of an organisation

Article 26: An insurance institution shall require the approval of the CIRC if:

(1) the name of the insurance company is to be changed;

(2) it is to undergo a change in the organisational form;

(3) a change is to be made to its registered capital;

(4) it is to expand its scope of business;

(5) it is to change its place of registration or place of business;

(6) the insurance company is to be divided or merged;

(7) the articles of association of the insurance company are to be amended;

(8) there is to be a change in a shareholder whose capital contribution accounts for at least 5% of the total capital, in the case of a limited liability company, or a shareholder holding at least 5% of the shares, in the case of a company limited by shares; or

(9) another circumstance as specified by the CIRC applies.

Article 27: An insurance institution shall report to the CIRC within 15 days from the date on which any of the following circumstances arises:

(1) a change in a shareholder whose capital contribution accounts for not more than 5% of the total capital, in the case of a limited liability company, or in a shareholder holding not more than 5% of the shares, in the case of a company limited by shares, with the exception of changes in the shareholders of listed companies;

(2) a change in the name of a shareholder of the insurance company, with the exception of shareholders of listed companies;

(3) a change in the name of an establishment of an insurance company; or

(4) another circumstance as specified by the CIRC arises.

Article 28: The dissolution of an insurance company in accordance with the law shall be subject to the approval of the CIRC and the following materials shall be submitted in triplicate:

(1) an application letter for dissolution;

(2) the resolution of the shareholders' general meeting or shareholders' meeting;

(3) details of the liquidation organisation and the person in charge thereof and related supporting documentation;

(4) the liquidation procedure;

(5) the claim and debt arrangement;

(6) the asset distribution plan and asset disposal plan; and

(7) other materials that the CIRC specifies be submitted.

Article 29: When an insurance company is dissolved in accordance with the law, a liquidation committee shall be established, and the liquidation work shall be monitored and guided by the CIRC.

When an insurance company is closed down in accordance with the law, the CIRC shall, in a timely manner, arrange for the shareholders, relevant departments and relevant professionals to establish a liquidation committee.

Article 30: The liquidation committee shall notify the creditors within 10 days from the date of its establishment and, within 60 days, publish an announcement at least three times in the newspapers designated by the CIRC.

The liquidation committee shall appoint a creditworthy accounting firm and law firm to assess the company's claims, debts and assets.

Article 31: The closing down of an establishment by an insurance company shall be subject to the approval of the CIRC. The permit for the engagement in insurance business by an establishment shall automatically become null and void on the date the closing down is approved and shall be returned within 15 days from the date the closing is approved.

If an insurance company merges or closes down establishments, it shall publish an announcement to that effect and notify in writing the relevant proposers, insured or beneficiaries and fully inform them on matters such as the payment of insurance premiums and collection of insurance proceeds.

Article 32: When an insurance company is dissolved or closed down in accordance with the law, its assets shall be disposed of by way of an auction, transfer by agreement or other method approved by the CIRC.

Article 33: When an insurance company is dissolved or closed down in accordance with the law, the company's shareholders may not distribute the company's assets or obtain any benefits from the company until the liabilities under the insurance contracts have been liquidated.

Article 34: If the circumstance set forth in Article 2 of the PRC Enterprise Bankruptcy Law applies to an insurance company, an application shall be made for restructuring, amiable composition or bankruptcy liquidation in accordance with the law.

Part Five: Management of establishments

Article 35: An insurance company shall strengthen the management of its establishments, procure lawful and compliant operation by its establishments and ensure that higher-level organisations can effectively manage and control the lower-level establishments under their management.

Article 36: The head office of an insurance company shall formulate the management system for its establishments in accordance with these Provisions and its development needs. Its provincial-level branches shall formulate the management system for the establishments in their provinces, autonomous regions or municipalities directly under the central government in accordance with the provisions of the head office and actual local circumstances.

For establishments set up in a municipality with independent plans by an insurance company, the management system therefor shall be formulated by the provincial-level branch or the establishment designated by the insurance company pursuant to the third paragraph of Article 4 hereof.

Article 37: The system for the management of establishments shall at minimum include the following:

(1) the functions of the establishments at each level;

(2) requirements in respect of the allocation of personnel, premises, equipment, etc. of establishments at each level;

(3) the internal decision-making system for the establishment and closing down of establishments; and

(4) the management and control duties and measures of the higher-level organisations in respect of lower-level establishments.

Article 38: Establishments of an insurance company shall employ the necessary number of working personnel. The senior management personnel or persons in charge of an establishment shall be full-time employees who have concluded employment contracts with the insurance company.

Article 39: An establishment of an insurance company shall have a compliant and stable place of business and be equipped with the necessary office equipment while it is in operation and existing.

Article 40: An establishment of an insurance company shall display its original permit for engagement in insurance business in a prominent location in its place of business for inspection.

Part Six: Insurance operations

Article 41: An establishment of an insurance company may not engage in insurance business beyond its own province, autonomous region or municipality directly under the central government, with the exception of the circumstances set forth in Article 42 hereof or as otherwise provided by the CIRC.

Article 42: If an insurance institution participates in co-insurance, engages in large-scale commercial insurance or master policy insurance business or underwrites insurance business beyond its own province, autonomous region or municipality directly under the central government through the internet, telephone marketing or other such method, it shall comply with relevant CIRC provisions.

Article 43: An insurance institution shall formulate its insurance clauses and set its premium rates in a fair and reasonable manner, and may not harm the lawful rights and interests of proposers, the insured or beneficiaries.

Article 44: An insurance institution's business promotion materials shall be objective, complete and true, and shall specify the insurance institution's name and address.

Article 45: An insurance institution shall disclose relevant information in accordance with CIRC provisions.

An insurance institution may not use advertisements or other means of publicity to give misleading publicity as to its insurance clauses and service quality, etc.

Article 46: An insurance institution shall bring to the attention of proposers in accordance with the Insurance Law and CIRC provisions matters such as exemption of the insurance company's liability, policy surrender, fee deductions, cash value and cooling-off period in its insurance contracts.

Article 47: When engaging in its business, an insurance institution shall comply with the principle of fair competition, and may not engage in unfair competition.

Article 48: An insurance institution shall not compare, in a one-sided manner, its insurance clauses and insurance premium rates with similar insurance clauses and insurance premium rates of other insurance companies, or the deposit interest rates of financial institutions.

Article 49: An insurance institution may not harm the reputation of another insurance institution by fabricating facts, spreading false facts or other such means.

An insurance institution may not use a government or its agencies, or a monopolistic enterprise or organisation to exclude or hinder other insurance institutions from engaging in insurance business.

Article 50: An insurance institution may not persuade or induce a proposer to terminate its insurance contract with another insurance institution.

Article 51: An insurance institution may not give or undertake to give to a proposer, the insured or the beneficiary premium rebates other than those specified in the insurance contract or other benefits.

Article 52: Insurance institutions, other than reinsurance companies, shall, in accordance with provisions, establish a customer service department or an inquiry and complaint department, and make their inquiry and complaint telephone number public.

An insurance institution shall duly handle insurance complaints, and inform the complainant of its handling opinion in a timely manner.

Article 53: An insurance institution shall establish an insurance agent registration and management system and strengthen the training and management of insurance agents, and may not incite or induce an insurance agent to commit an act that runs counter to his/her obligation of good faith.

Article 54: An insurance institution may not engage an unqualified organisation or individual to engage in insurance sales activities, or pay commissions or other benefits to unqualified organisations or individuals.

Article 55: An insurance company shall establish a sound corporate governance structure, strengthen internal management and establish stringent internal control systems.

Article 56: An insurance company shall establish the relevant system to control and manage affiliated transactions. Major affiliated transactions of an insurance company shall be reported to the CIRC in accordance with provisions in a timely manner.

Article 57: When an insurance institution is to appoint a director, supervisor or a member of senior management, it shall, before such appointment, apply to the CIRC for the approval of the aforementioned person's qualifications to serve in the position.

The administration of the qualifications for the positions of directors, supervisors and senior management personnel of insurance institutions shall be handled in accordance with the Insurance Law and relevant CIRC provisions.

Article 58: An insurance institution shall manage and use its permit to engage in insurance business in accordance with the Insurance Law and relevant CIRC provisions.

Part Seven: Oversight

Article 59: In overseeing insurance institutions, the CIRC shall employ a combination of onsite oversight and offsite oversight.

Article 60: The CIRC may designate an insurance institution for special attention if:

(1) it commits a serious violation of the law;

(2) its solvency is insufficient;

(3) there are irregularities in its financial position; or

(4) there is another circumstance that makes the CIRC believe special attention is required.

Article 61: Onsite inspections of insurance institutions by the CIRC shall cover but not be limited to the following matters:

(1) whether the establishment of or changes to the organisation have been approved in accordance with the law or reported to the CIRC;

(2) whether the qualifications of the directors, supervisors and senior management personnel for their positions have been approved in accordance with the law;

(3) whether the materials submitted for administrative licensing were true;

(4) whether their capital and various reserves are genuine and adequate;

(5) whether their corporate governance and internal controls comply with CIRC provisions;

(6) whether their solvency is sufficient;

(7) whether their application of funds is lawful;

(8) whether their business operations and financial circumstances are lawful, and whether their reports, statements, documents and information are timely, complete and true;

(9) whether their insurance clauses and insurance premium rates have been approved or placed on the record in accordance with provisions;

(10) whether their business dealings with insurance intermediaries are lawful;

(11) whether their information technology work complies with provisions;

(12) whether matters that require reporting after the fact have been reported in accordance with provisions; and

(13) other matters that the CIRC inspects in accordance with the law.

Article 62: When the CIRC conducts an onsite inspection of an insurance institution, the insurance institution shall give its co-operation and provide the relevant documents and materials as required by the CIRC.

Article 63: The CIRC's working personnel shall conduct onsite inspections in accordance with the law. There may not be less than two inspectors and they shall present their credentials and the inspection notice.

When conducting an onsite inspection, the CIRC may appoint an accounting firm or other such intermediary service firm to provide relevant professional services. When the CIRC appoints an intermediary service organisation as mentioned above to provide professional services, it shall execute a written appointment agreement therewith.

Article 64: If an insurance institution frequently closes down establishments or frequently changes the places of business of its establishments, and the same could have or has had an adverse effect on the insurance company's operations, the CIRC has the authority, in line with regulatory requirements, to take the following measures:

(1) require the insurance institution to improve the relevant system for the management of its establishments within a specified period of time;

(2) question the person in charge of the insurance institution and other relevant personnel to understand the relevant circumstances of the changes or closings;

(3) require the insurance institution to provide its relevant documents and information on the internal decision making with respect to the changes or closings;

(4) give a major-risk warning letter or give the relevant personnel a regulatory lecture; and

(5) take other measures in accordance with the law.

The insurance institution shall effect rectification as required by the CIRC and report on the results of such rectification in writing to the CIRC in a timely manner.

Article 65: The CIRC has the authority, in line with regulatory requirements, to require an insurance institution to submit reports or provide specific information.

Article 66: An insurance institution shall submit to the CIRC reports, statements, documents and information such as business reports, actuarial reports, financial accounting reports, solvency reports and compliance reports in accordance with provisions in a timely manner.

All of the reports, statements, documents and information submitted by an insurance institution to the CIRC shall be true, complete and accurate.

Article 67: Material resolutions of the shareholders' general meeting, shareholders' meeting and board of directors of an insurance company shall be reported to the CIRC within 30 days after the adoption thereof, unless otherwise provided by the CIRC.

Article 68: The CIRC has the authority, in line with regulatory requirements, to give the directors, supervisors and senior management personnel of an insurance institution a regulatory lecture and require them to give an account of the insurance business operations, risk control, internal management and other such material matters.

Article 69: If an insurance institution or a member of its practising personnel violates these Provisions, the CIRC shall impose penalties in accordance with laws and administrative regulations. If laws and administrative regulations are silent in respect thereof, the CIRC shall order rectification, give a warning and, if there is illegal income, impose a fine of not less than the amount and not more than three times the amount of illegal income, up to a maximum of Rmb30,000, or, if there is no illegal income, impose a fine of not more than Rmb10,000. If there is suspicion of a criminal offence, the case shall be turned over to the judicial authorities in accordance with the law for pursuit of criminal liability.

Part Eight: Supplementary provisions

Article 70: These Provisions shall apply to the setting up of establishments by wholly foreign-owned insurance companies and Sino-foreign equity joint venture insurance companies. In the event of a discrepancy between relevant provisions previously issued by the CIRC and these Provisions, these Provisions shall prevail.

These Provisions shall apply to other aspects of the administration of wholly foreign-owned insurance companies and Sino-foreign equity joint venture insurance companies, unless otherwise provided in laws, administrative regulations or by the CIRC.

Article 71: Except as provided in Article 42 and the first paragraph of Article 72 hereof, a branch of a foreign insurance company may carry out its business only within the jurisdiction of the province, autonomous region or municipality directly under the central government where it is domiciled.

For other aspects of the administration of branches of foreign insurance companies, reference shall be made to relevant provisions hereof on head offices of insurance companies, unless otherwise provided in laws, administrative regulations or by the CIRC.

Article 72: Reinsurance companies, including branches of foreign reinsurance companies, may directly carry out their reinsurance business nationwide.

These Provisions shall apply to reinsurance companies, unless otherwise provided in laws, administrative regulations or by the CIRC.

Article 73: These Provisions shall apply as reference for policy insurance companies and mutual insurance companies, unless otherwise provided by the state.

Article 74: An insurance company shall require the approval of the CIRC to establish a subsidiary, establishment or representative office abroad. The conditions for the establishment and the administration thereof shall be provided for separately by the CIRC.

The establishment abroad of an insurance institution by a domestic organisation that is not an insurance institution shall be subject to the approval of the CIRC.

Article 75: Insurance companies shall join insurance industry associations in accordance with the Insurance Law.

Article 76: Establishments set up before the implementation hereof need not apply anew for approval for establishment in accordance with the conditions for establishment set forth herein, but shall comply with the requirements hereof in respect of the routine management of establishments. If an establishment is not in compliance with provisions, it shall effect rectification within two years from the date of implementation hereof so that it satisfies the relevant requirements hereof in respect of the qualifications of its senior management personnel or persons in charge, premises compliance, permit use, management of establishments, etc.

Article 77: Reports, statements, documents and information submitted by insurance institutions in accordance herewith shall be in Chinese. If an original is in a foreign language, it shall be accompanied by a Chinese translation. In the event of a discrepancy between the Chinese language version and the foreign language version, the Chinese language version shall prevail.

Article 78: The term “day” as used herein means a working day, and excludes statutory holidays. The terms “not less than”, “at least” and “not more than” as used herein include the number itself.

Article 79: The CIRC is in charge of interpreting these Provisions.

Article 80: These Provisions shall be effective as of October 1 2009. The Provisions for the Administration of Insurance Companies (Order of the CIRC [2004] No.3) issued by the CIRC on May 13 2004 shall be repealed simultaneously.