The new Draft Measures take a different approach. A single shareholder, together with its affiliates, may in the future hold up to one-third of the share capital of the subject insurance company. Only shareholders who are themselves insurance companies are not subject to this limit if they invest in other insurance companies for purposes of innovation, specialization or integrated operation. As the Draft Measures will not supersede the Insurance M&A Measures, CIRC-approved Control Acquisitions will also remain permitted.

Shareholder categories and criteria

The Draft Measures introduce and define the following three categories of shareholders:

There is no definition of “major” or “controlling” influence in the Draft Measures. In applying this test, the CIRC is likely to consider whether a shareholder has minority protection rights beyond what is customary for a holder of up to 10% or up to 20% of an insurance company's share capital.

The Draft Measures stipulate qualification requirements for each of the three shareholder categories. Generally, the new financial qualification requirements are similar to those applicable under the Equity Measures, but apply from a lower shareholding threshold: under the Draft Measures, Strategic Shareholders (holders of at least 10% equity interest) must satisfy financial tests that now apply to holders of at least 15%.

Investor qualification requirements

In addition to the three shareholder categories, the Draft Measures also introduce or modify requirements and restrictions that are based on the type of investor.

Foreign investors

The Draft Measures repeat the existing requirements for foreign investors in domestic insurance companies: most importantly, foreign investors must be financial institutions that have been continuously profitable with an A-grade long-term credit rating in the last three financial years and have total assets of at least $2 billion.

Under the Draft Measures, foreign investors will additionally be subject to the requirements for Financial, Strategic or Controlling Shareholders, depending on the size of their shareholding. Those requirements will also apply to domestic shareholders in foreign-invested insurance companies (i.e. companies with at least 25% foreign shareholding).

Insurance companies

The Draft Measures create a special regime for insurance companies that invest in other PRC insurance companies: they will not be limited to holding only up to one-third of the share capital. The Draft Measures also provide that insurance companies “can only invest in insurance subsidiaries that they have themselves established or acquired”.

The insurance company that is making the investment would also be subject to other qualification requirements: it must have been in existence for three years and have net assets of at least Rmb3 billion (Rmb10 billion in case the investor is an insurance group company), a core solvency adequacy ratio of at least 75%, a comprehensive solvency adequacy ratio of at least 150%, and an integrated risk rating of B or higher.

Insurance companies will not be subject to these restrictions and requirements when purchasing shares of listed insurance companies on an exchange.

Other types of investors

The Draft Measures also specify the other types of investors that may become shareholders of insurance companies. Among them, domestic limited partnerships are subject to qualification requirements and may only be Financial Shareholders, consistent with existing regulations. Quasi-governmental institutions (shiye danwei) and social organizations may only be Financial Shareholders. Natural persons as well as asset management plans, trusts and other investment vehicles may only become Financial Shareholders of listed insurance companies.

Grandfathering?

The changes in restrictions and requirements for investors proposed in the Draft Measures raise the question of how the CIRC will deal with current investors who would not be allowed to invest, or would only be allowed to hold a smaller equity interest, under the Draft Measures. The Draft Measures are silent on this subject. It would be consistent with past practice to grandfather those existing investments, and it is hoped that the final version of the Draft Measures will include a provision to this effect.

Approvals and filings

Similar to the Equity Measures, the Draft Measures have retained 5% as the shareholding percentage which differentiates between the need for an approval or a filing. Under the Draft Measures, changes in a shareholder holding at least 5% of the share capital of an insurance company are required to be approved by CIRC, whereas changes in a shareholder holding less than 5% of the share capital of an insurance company will only be required to be filed with CIRC.

The Draft Measures set out a separate regime for changes in the share capital of a listed insurance company. This contrasts with the separate regime under the Equity Measures for transactions “made through a securities exchange”, which has created ambiguity in whether differences in treatment are intended for on-exchange and off-exchange transactions. Under the Draft Measures, in the case of an acquisition of shares in a listed insurance company, an investor is required to notify the insurer within 15 working days after the date of trade upon its shareholding percentage reaching 5%, 10% and 20%, respectively, and the insurer is required to report to CIRC for approval within 10 working days thereafter. Changes in a shareholder holding less than 5% of the share capital of a listed insurance company are not required to be filed with CIRC.

Lock-up periods

The Draft Measures provide for lock-up periods applicable to the transfer of shares beginning from the establishment of an insurance company. The lock-up periods are three years for Controlling Shareholders, two years for Strategic Shareholders and one year for Financial Shareholders. Unlike the Draft Measures, the Equity Measures do not impose a longer lock-up on promoters who exceed a 10% or 20% shareholding threshold.

On the other hand, the 2013 Circular and the Insurance M&A Measures prescribe a three-year lock-up from the date a shareholder acquires more than 20% equity interest (under the 2013 Circular) or completes a Control Acquisition (under the Insurance M&A Measures). As the Draft Measures are intended to supersede the 2013 Circular, it appears only the lock-up under the Insurance M&A Measures would remain in effect after the Draft Measures become law.

The Draft Measures also contain an anti-circumvention rule: unless otherwise stipulated by the CIRC, a transaction resulting in a change of the actual controller of a Controlling Shareholder is not permitted if the main purpose of the transaction is to acquire the underlying shares in the insurance company.

Financing

The Draft Measures will abolish the requirement in the Equity Measures that equity investments in insurance companies must be made with the investor's own funds.

This relaxation is significant not only for debt financing, but also for total return swaps and similar derivative transactions, which foreign investors (such as private equity funds) who do not qualify as shareholders in insurance companies have used to obtain returns linked to equity investments in insurance companies. Those transactions have to be structured carefully to comply with the requirement that the shareholder invest with its own funds; removing this requirement would simplify derivative transactions.

The Draft Measures bar parties who were previously involved in nominee shareholding in insurance companies from investing in insurance companies again. Both fronting shareholders and counterparties to derivative transactions therefore should remain cautious in structuring such deals.

Industry outlook

As a growing sector with substantial capital needs, China insurance has been an active M&A market in recent years. The Draft Measures show that the CIRC wishes to correct some investment trends and attract more diverse investors.

A number of large recent deals involved Chinese listed companies with core activities outside the financial services industry acquiring majority interests in insurance companies. Such deals would not be compatible with the Draft Measures. Instead, the regulator seems to encourage insurance companies to have several large shareholders (who each hold no more than one-third of the share capital) and whose financial strength is more stringently tested than before.

The Draft Measures also restrict insurance companies from becoming investors in other insurance companies. There will have to be a strategic rationale and size for such purchases, unless it is a financial investment on the stock market, and the investor will have to satisfy specific financial tests.

At the same time, the Draft Measures also make financing and other structured transactions easier by removing the requirement that an investor must use its own funds, thus giving more investors access to the insurance industry.

Betty Yap, Partner, Hans-Günther Herrmann, Counsel, and Lucia Chen, China Associate
Paul, Weiss, Rifkind, Wharton & Garrison
Hong Kong and Beijing

自2016年起，中国保险监督管理委员会(“中国保监会”)对保险行业金融风险的关注与日俱增。激进销售高回报产品、资产负债错配、盲目收购和高风险资产投资(包括海外并购)，均在最近发给保险公司的通知和中国保监会官员的声明中凸显。

除了其他减轻上述风险的措施以外，中国保监会还采取行动加强保险公司的股权结构管理。2016年12月19日，中国保监会发布了《保险公司股权管理办法(征求意见稿)》(“征求意见稿”)，向社会公开征求意见。

如果征求意见稿获得通过，其有可能增加被允许对保险公司进行投资的投资人类型并同时增加适用于投资人的限制和条件，从而影响中国保险行业的并购交易。最为重要的是，征求意见稿：

• 增加可成为保险公司股东的投资人类型，但对某些投资人类型设定持股比例上限；
• 就中国保险公司投资其他国内保险公司，设定新的条件和限制；
• 对持有保险公司10%或以上股权的持股人设定财务资质要求，而现行管理办法中仅就15%或以上的持股人设有财务资质要求；
• 将单一投资人可持有的持股比例上限从20%上调至33.3%，同时大幅减少了此规则适用的例外情况；
• 分别对持有20%或10%股权的保险公司发起人设定三年或两年的禁售期；
• 删除投资人必须以其自有资金向保险公司投资的要求，从而使债务融资及可能的其他结构性交易得以实行；
• 除了对中国保险公司的外国投资人适用更为严格的资质要求外，对该等外国投资人的管理制度，没有实质性的改变。

保险并购法规

对于内资保险公司(即外商投资比例低于25%的公司)进行的投资，中国保监会已通过了两套主要法规进行监管。征求意见稿拟取代中国保监会现行的《保险公司股权管理办法》(“股权管理办法”)，该股权管理办法经2013年印发的中国保监会通知(“2013年通知”)进行补充且在2014年被修订。

但是，征求意见稿并不影响中国保监会于2014年通过的有关保险公司收购合并的规则(“保险并购办法”)。保险并购办法专门适用于且仅针对保险公司的合并或收购，即通过该控制性收购，收购人(包括其关联方和一致行动人)成为保险公司第一大股东(“控制性收购”)，并且(i)持有保险公司三分之一以上的股权，或者(ii)对保险公司实现有效控制。

持股比例上限

根据股权管理办法，单个股东(包括其关联方)的持股比例不得超过20%，但中国保监会可基于某些因素允许单个股东持股比例不受该规定限制。通过这一灵活性规定，2013年通知允许投资目标保险公司至少已满三年的投资人将其持股比例最高增加至51%。此外，保险并购办法规定，对于控制性收购，中国保监会可就该至少持股三年规定的限制，向投资人授予豁免。

就持股比例上限，新的征求意见稿作出了不同的规定。单一股东(包括其关联方)将来可持有目标保险公司最多三分之一的股权。本身是保险公司的股东因业务创新、专业化或集团化经营需要而投资其他保险公司时，其持股比例不受限制。由于征求意见稿将不会取代保险并购办法，因此，中国保监会批准的控制性收购仍将获允许。

股东分类和标准

征求意见稿新设及定义了以下三类股东：