Revised Insurance Law Released by Standing Committee of the NPC
On February 28, 2009, the Revised Insurance Law of the People's Republic of China (the "Insurance Law") was passed at the Seventh Session of the Standing Committee of the Eleventh National People's Congress, effective October, 1, 2009. The Insurance Law includes 29 newly-added clauses, which supplement existing provisions relating to insurance contracts, and highlight the protection of legitimate rights and interests of policy-holders and insured parties. The Insurance Law further clarifies start-up and operation rules for insurance firms and provides for a new way of "investing in real estate" by utilizing insurance funds. Moreover, specific qualifications for shareholders and senior management personnel of insurance firms are stipulated. For example, the main shareholders of an insurance company must have the capacity to consistently make profits and a net capital of no less than RMB200 million. The shareholders must also have a sound credit standing and may not have records of any significant illegal activity within the latest three years. The Insurance Law also provides that shareholders, controllers, directors, supervisors and senior management personnel shall not infringe on a company's interests by engaging in affiliated transactions.
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