BIZCHINA / Finance
Insurance Law of the People's Republic of China
Updated: 2006-04-18 09:11
Article 86. If an insurance co
BIZCHINA / Finance
Securities Law of the People's Republic of China (revised in 2005)
Updated: 2006-04-18 08:56
Article 83 The state-owned enterprises and state-holding enterprises that
engage in any transaction of listed stocks shall observe the relevant
provisions of the state.
Article 84 When stock exchanges, securities companies, securities
registration and clearing institutions, securities trading service
organizations as well as their functionaries discover any prohibited
activities in securities trading, they shall report such activities to
the securities regulation body in time.
Section V Acquisition of Listed Companies
Article 85 An investor may purchase a listed company by means of tender
offer or agreement as well as by any other legal means.
Article 86 Where an investor, through securities trading at a stock
exchange, comes to hold or holds with any other person 5 % of the shares
as issued by a listed company by means of agreement or any other
arrangement, the investor shall, within three days as of the date when
such shareholding becomes a fact, submit a written report to the
securities regulatory authority under the State Council and the stock
exchange, notify the relevant listed company and announce the fact to the
general public. Within the aforesaid prescribed period, the investor may
not purchase or sell any more shares of the listed company. In case an
investor holds or holds with any other person 5% of the shares as issued
by a listed company by means of agreement or any other arrangement, he
shall, pursuant to the provisions of the preceding paragraph herein, make
report and announcement of each 5% increase or decrease in the proportion
of the issued shares of the said company he holds through securities
trading at a stock exchange. Within the reporting period as well as two
days after the relevant report and announcement are made, the investor
may not purchase or sell any more shares of the listed company.
Article 87 The written report and announcement as made according to the
provisions of the preceding Article herein shall include the following
contents:
(1) The name and domicile of the shareholder;
(2) The description and amount of the shares as held; and
(3) The date on which the shareholding or any increase or decrease in
the shareholding reaches the statutory percentage.
Article 88 Where an investor holds or holds with any other person 30% of
the stocks as issued by a listed company by means of agreement or any
other arrangement through securities trading at a stock exchange and if
the purchase is continued, he shall issue a tender offer to all the
shareholders of the said listed company to purchase all of or part of the
shares of the listed company. It shall be stipulated in a tender offer as
issued to a listed company that, where the share amount as promised to be
sold by the shareholders of the target company exceeds the scheduled
amount of stocks for purchase, the purchaser shall carry out the
acquisition according to the relevant percentage.
Article 89 Before any tender offer is issued pursuant to the provisions
in the preceding Article herein, the relevant purchaser shall submit a
report on the acquisition of a listed company to the securities
regulatory authority under the State Council beforehand, which shall
indicate the following items:
(1) The name and domicile of the purchaser;
(2) The decision of the purchaser on acquisition;
(3) The name of the target listed company;
(4) The purpose of acquisition;
(5) The detailed description of the shares to be purchased and the
amount of shares to be purchased in schedule;
(6) The term and price of the acquisition;
(7) The amount and warranty of the funds as required by the acquisition;
and
(8) The proportion of the amount of shares of the target company as held
by the purchaser in the total amount of shares of the target company as
issued, when the report on the acquisition of the listed company is
reported. A purchaser shall concurrently submit to the stock exchange a
report on the acquisition of the relevant company.
Article 90 A purchaser shall, after 15 days as of the day when the report
on the acquisition of a listed company is submitted pursuant to the
preceding Article herein, announce its tender offer. Within the aforesaid
term, where the securities regulatory authority under the State Council
finds that any report in the acquisition of a listed company fails to
satisfy the provisions of the relevant laws and administrative
regulations, it shall notify the relevant purchaser in a timely manner.
The relevant purchaser may not announce its tender offer. The term for
acquisition as stipulated in a tender offer shall be not less than 30
days but not more than 60 days.
Article 91 Within the acceptance term as prescribed in a tender offer, no
purchaser may revoke its tender offer. Where a purchaser requests for
altering its tender offer, it shall submit a report to the securities
regulatory authority under the State Council and the stock exchange in
advance and announce the alteration upon the approval thereby.
Article 92 All the terms of acquisition as stipulated in a tender offer
shall apply to all the shareholders of a target company.
Article 93 In the event of an acquisition by tender offer, a purchaser
shall, within the term for acquisition, not sell any share of the target
company, nor shall it buy any share of the target company by any other
means that hasn't been stipulated by provisions of its tender offer or
that oversteps the terms as stipulated in its tender offer.
Article 94 In the event of an acquisition by agreement, a purchaser may
carry out share transfer with the shareholders of the target company by
means of agreement according to the provisions of the relevant laws and
administrative regulations. In the case of an acquisition of a listed
company by agreement, a purchaser shall, within three days after the
acquisition agreement is reached, submit a written report on the
acquisition agreement to the securities regulatory authority under the
State Council and the stock exchange as well as announce it to the
general public. No acquisition agreement may be performed before the
relevant announcement.
Article 95 In the event of an acquisition by agreement, both parties to
the agreement may temporarily entrust a securities registration and
clearing institution to keep the stocks as transferred and deposit the
relevant funds in a designated bank.
Article 96 In the event of an acquisition by agreement, where a purchaser
has purchased, held or held with any other person 30% of the shares as
issued by a listed company through agreement or any other arrangement and
if the acquisition is continued, the purchaser shall issue an offer to
all of the shareholders of the target listed company for purchasing all
of or part of the company's shares, unless a tender offer is been
exempted from being issued by the securities regulatory authority under
the State Council. A purchaser that purchases the shares of a listed
company by means of tender offer according to the provisions of the
preceding paragraph herein shall abide by the provisions of Articles
89~93 of the present Law.
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mpany is unable to pay debts due, it may be
declared bankrupt by the People's Court upon approval of the departments
in charge of financial supervision and management. In the event an
insurance company is declared bankrupt in accordance with the law, the
People's Court shall organize the departments in charge of financial
supervision and management and other relevant departments and person to
form a liquidation group to conduct liquidation.
Article 87. Where an insurance company engaging in life insurance is
cancelled or declared bankrupt in accordance with the law, the life
insurance contracts and reserve funds it holds must be transferred to
other insurance companies engaged in life insurance business. Upon
failure to reach a transfer agreement with other insurance companies, the
departments in charge of financial supervision and management may
designate an insurance company engaged in life insurance to accept such
transfer.
Article 88. Where an insurance company is declared bankrupt in accordance
with the law, the bankrupt's assets, after first being used to cover
bankruptcy expenses, shall be distributed in the following order of
priority:
(1) to pay salaries and labor insurance expenses owed to the workers;
(2) to make indemnification or payment of insurance money;
(3) to pay taxes owed by the company; and
(4) to repay the company's debts.
Payments shall be made on a pro rata basis within each of the categories
set forth above if the bankrupt's assets are insufficient to meet the
repayment requirement in such category.
Article 89. Where an insurance company terminates business activity in
accordance with the law, it shall cancel its license to engage in
insurance business operations.
Article 90. In the absence of specific stipulations in this Law
concerning the establishment, alteration, dissolution and liquidation of
insurance companies, the provisions of the Company Law and other relevant
laws and administrative regulations shall apply.
Chapter IV Rules of Insurance Operation
Article 91. The business scope of insurance companies:
(1) property insurance includes property loss insurance, liability
insurance, credit insurance and other insurance business;
(2) personal insurance includes life insurance, health insurance,
accidental injury insurance and other insurance business.
The same Insurer shall not concurrently undertake both property insurance
and life insurance operations.
The business scope of insurance companies shall be verified and
determined by financial supervision and management department. Insurance
companies shall only undertake insurance business operations within the
verified business scope.
Insurance companies which have been set up before this Law is put into
effect shall be subject to stipulations of the State Council, pursuant to
the above Paragraph 2 hereof.
Article 92. Subject to the verification and determination by the
financial supervision and management department, insurance companies may
conduct the following reinsurance business for all types of insurance set
forth in the previous paragraph.
(1) outward reinsurance;
(2) inward reinsurance.
Article 93. Insurance companies engaging in insurance business other than
long-term life insurance shall set aside reserve funds for unrealized
commitments from that year's retained insurance premiums. The total
amount set aside and retained shall be the equivalent to 50% of that
year's retained premiums.
Insurance companies covering long-term life insurance shall set aside
reserve funds for unrealized commitments according to the total net value
of all valid long-term life insurance policies.
Article 94. Insurance companies shall set aside outstanding loss reserve
funds according to the amounts of insurance compensation or payment
already claimed and the amounts of compensation or payment yet to be
claimed for insured events which have already occurred.
Article 95. Aside from the reserve funds retained in accordance with the
stipulations of Article 93 and Article 94 hereof, insurance companies
shall, in accordance with relevant laws, administrative regulations and
the State financial accounting system, set aside public reserve funds and
total reserve funds.
Article 96. In order to guarantee the interest of the Insurer, support
the steady operation of insurance companies, insurance companies shall,
pursuant to the stipulations of the financial supervision and management
department, set aside insurance guarantee funds.
Insurance guarantee funds shall be put under centralized management and
subject to overall planned use.
Article 97. Insurance companies shall have a minimum capacity to
indemnify which shall not be less than the difference between real assets
and outstanding debts as stipulated by the financial supervision and
management departments. When the minimum capacity to indemnify is less
than the amount of difference as stipulated by the financial supervision
and management departments, the insurance company shall increase its
capital to make up for the shortfall.
Article 98. The retained premiums by an insurance company covering
property insurance operations shall not exceed an amount four times the
aggregate of its actual capital plus the public reserve funds.
Article 99. An insurance company shall not allow its insurance of any one
high-risk unit (i.e. the extent of maximum loss which may be caused by
the occurrence of one insured event) to exceed 10% of its total of actual
capital and public reserve funds or total reserve funds. The amount in
excess shall be reinsured.
Article 100. Calculation methods for high-risk units and arrangement
plans with respect to catastrophe risks by insurance companies shall be
submitted to the financial supervision and management department for
verification and approval.
Article 101. Except for long-term life insurance, an insurance company
shall, in accordance with the State relevant regulations, reinsure 20% of
each insurance transaction it underwrites.
Article 102. When requiring outward reinsurance, an insurance company
shall give priority to domestic insurance companies.
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