China Insurance Regulatory Commission, Circular on Matters Relevant to the Offering of Subordinated Convertible Bonds by Listed Insurance Companies

中国保险监督管理委员会关于上市保险公司发行次级可转换债券有关事项的通知

July 12, 2012 | BY

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Listed insurance companies and insurance group companies allowed to issue subordinated convertible bonds.

Clp Reference: 3910/12.05.15 Promulgated: 2012-05-15

Issued: May 15 2012

Applicability: The term “subordinated convertible bonds of Insurance Companies” refers to bonds with a term of five years or more that are issued by Insurance Companies in accordance with the statutory procedure, whose principal and coupons follow insurance policy liabilities and other general liabilities in the sequence of discharge at the time of insolvency, and that can be converted into company shares according to the agreed conditions within a specified time period (Article 1).

Main contents: The Circular allows listed insurance companies and insurance group companies (Insurance Companies) to offer subordinated convertible bonds. Subordinated convertible bonds issued by Insurance Companies may, before being converted into shares, be included in the company's supplementary capital (Article 2). Insurance Companies that apply to offer subordinated convertible bonds shall fulfil the following criteria in addition to those stipulated by the securities regulatory department:

(i) at the time of insolvency, the principal of, and coupons on, the subordinated convertible bonds shall follow insurance policy liabilities and other general liabilities in the sequence of discharge;

(ii) subordinated convertible bonds issued by an Insurance Company may not be secured or pledged against the company's assets;

(iii) the design of the clauses for the subordinated convertible bonds issued by an Insurance Company shall be conducive to the conversion of bonds into shares by the bondholders; and

(iv) the issuer may not separately grant holders of subordinated convertible bonds the right to sell back on their initiative, except for circumstances stipulated by the securities regulatory department (Article 3).

clp reference:3910/12.05.15promulgated:2012-05-15

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