Circular on Relevant Issues Concerning Stock Investment by Insurance Institutional Investors

2005/03/15

关于保险机构投资者股票投资交易有关问题的通知

Circular on Relevant Issues Concerning Stock Investment by Insurance Institutional Investors (the "Circular")

Issued: February 15, 2005

Effective: February 15, 2005

Issuing Authorities: The China Insurance Regulatory Commission ("CIRC") and the China Securities Regulatory Commission ("CSRC")

Main Contents: Along with the Circular, the CIRC and the CSRC also jointly promulgated its appendix, the Guidelines on Stock Investment Deposit and Clearing of Insurance Institutional Investors ("Guidelines").

The Circular, which mainly deals with such issues as securities accounts, trading seats, and fund clearance of insurance institutional investors, provides clarification of procedures that insurance companies must follow to invest on China's stock markets, and details responsibilities of parties involved in the investment process.

According to the Circular, in order to invest in the stock market, an insurance institutional investor ("Investor") should entrust an insurance fund investment trustee ("Trustee") to apply for a securities account (the name of which should bear both the names of the Investor and the insurance product) on the Investor's behalf.

Investors shall conduct stock transactions through independent seats, that is, seats specifically for the insurance fund's investments.

Investors and Trustees shall, according to the Guidelines, develop businesses relating to the Investors' stock investment such as for account management, securities deposits, entrustment and clearing. Trustees shall be responsible for depositing, clearing and settling the stock investments of insurance funds.

Investors shall abide by applicable regulations concerning stock issuance when applying for new shares. There is no maximum limit for such applications. With respect to an Investor's traditional insurance products and participating insurance products, the subscribed amount shall not exceed 10 percent of the amount of the Investor's total assets in the proceeding year, and the number of subscribed shares shall not exceed the total number of shares issued by the concerned stock company at such time.

The Circular also grants foreign insurance company branches the same treatment as Chinese insurance companies with legal person status, and allows branches of foreign insurance companies in China to invest in stocks in accordance with the Circular.



	Article featured in Business Beijing, March 2005 Publication sponsored by Information Office of the Beijing Municipal Government, Beijing Municipal Bureau of Commerce, Development & Reform Commission of Beijing Municipality, China Council for the Promotion of International Trade (Beijing Sub-Council)