Chinese lawmakers consider insurance company investment law

BEIJING, Feb. 25 (Chinese media) -- Insurance company shareholders could find

their rights restricted if they approve risky capital operations, according to a

draft amendment to the Insurance Law, submitted to Chinese lawmakers for

discussion Wednesday.

The draft amendment says the State Council's insurance regulatory body will

have the right to order the insurance company's shareholders to stop affiliate

company transactions that seriously harm the company's interests and undermine

its solvency.

The draft gives no definition of these transactions, but stipulates that

the China Insurance Regulatory Commission (CIRC) will decide on which

transactions come into this category.

Before the actions are corrected, the regulatory body will constrain

shareholders in the exercising of their rights. If they refuse to correct the

actions, the regulatory body will have the right to order them to transfer their

shares, but the draft gave no details as to how or to whom the shares would be

transferred.

"The new article was added based on proposals from lawmakers in previous

discussions. It is a supervision measure to prevent and correct the misuse of

shareholders' power," said Sun Anmin, deputy director of the NPC law committee,

at the session of the Standing Committee of the 11th National People's Congress

(NPC) that opened Wednesday.

The draft amendment has been submitted for review for the third time and

will be put to a vote on Saturday, the last day of the session.

The draft amendment was first submitted for discussion last August. It

expanded the investment channel for insurance companies from government bonds

and financial bills to stocks, securities-investment funds and properties.

It also tightened qualifications for setting up an insurance company.

According to the draft amendments, a company's main shareholders should

have net assets of at least 200 million yuan (29 million U.S. dollars) each, a

good credit record and no record of serious violation of laws and rules in the

last three years.

It also makes a stricter requirement on registered capital, requiring all

the company's registered capital to be raised from shareholders.