CBIRC Issues Measures on Related Party Transactions for Insurers
CBIRC issued administrative measures on related party transactions of insurance companies. These measures shall come into force as of the date of promulgation. CBIRC also issued questions and answers (Q&As) on these administrative measures. These measures aim to regulate the related party transactions of insurance companies, prevent the risks of connected transactions, safeguard the independence of insurance companies, and the interests of insurance consumers. The measures have been formulated in accordance with the relevant provisions of the Company Law of the People's Republic of China and the Insurance Law of the People's Republic of China.
Under these measures, the related transactions of an insurance company are classified into significant related party transactions and general related party transactions. Significant related party transactions refer to transactions in which the single or annual cumulative transaction amount between the insurance company or its holding subsidiaries and a related party reaches more than CNY 30 million and accounts for more than 1% of the audited net assets of the insurance company at the end of the previous year. General related party transactions refer to related party transactions other than material related party transactions. The key points covered in the administrative measures include the following:
- To improve the related party recognized standards. The measures draw on the international and domestic accounting standards and the actual situation of the supervision of related transactions of insurance companies in China, and reasonably defines the criteria for the identification of related parties.
- To develop regulatory indicators. The measures will help to further improve the proportion of supervision of fund-use related transactions, establish a proportional cap, and control the overall risk of connected transactions.
- To improve internal control and accountability mechanisms. The insurance company is required to set up the Board of Directors' Related Party Transaction Control Committee and the Related Party Transaction Management Office, which will be responsible for the comprehensive and daily management of the connected transactions, optimize the management process, and improve the internal control mechanism.
- To strengthen information disclosure. The Board of Directors' Related Party Transaction Control Committee will coordinate the management of information disclosure to ensure the authenticity, accuracy, and completeness of the information. Insurance companies are required to disclose not only related party transactions in accordance with accounting standards in the annual report, but also to disclose the overall situation of connected transactions in the current year, in accordance with regulatory requirements.
- To strengthen the regulatory function. The measures set up a special section to clarify the related transaction management and supervision duties, requiring the insurance company shareholders, directors, supervisors, senior management personnel, and other related parties to truthfully disclose the relevant information of the relationship, without concealing information or providing false statements.
Related Links (in Chinese)
Effective Date: September 09, 2019
Keywords: Asia Pacific, China, Insurance, Reinsurance, Proportionality, Related Party Transactions, CBIRC
Previous Article
ECB Publishes Results of Financial Stability Review in May 2019Next Article
EC Launches the Blockchain Association INATBARelated Articles
EBA Updates Filing Rules for Supervisory Reporting
The European Banking Authority (EBA) published version 5.1 of the filing rules for supervisory reporting.
ECB Amends Guideline on Procedures for Collection of AnaCredit Data
The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.
ECB Amends Guideline on Procedures for Collection of AnaCredit Data
The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.
EBA Publishes Standards on Disclosure of Investment Policy Under IFR
The European Banking Authority (EBA) published the final draft regulatory technical standards on disclosure of investment policy by investment firms, under the Investment Firms Regulation (IFR).
APRA Finalizes Guidance for New Prudential Standard on Remuneration
The Australian Prudential Regulation Authority (APRA) published the prudential practice guide CPG 511 to assist banks, insurers, and superannuation licensees in meeting requirements of CPS 511, the new prudential standard on remuneration.
OCC Updated LIBOR Self-Assessment Tool for Banks
The Office of the Comptroller of the Currency (OCC) published a bulletin that provides an updated self-assessment tool for banks to evaluate their preparedness for cessation of the London Interbank Offered Rate (LIBOR).
TCFD Updates Guidance for Financial Disclosures on Climate Risk
The Financial Stability Board (FSB) published a report that examines the progress made toward disclosures aligned with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
BCBS Report Examines Progress on Adoption of Basel III Framework
The Basel Committee on Banking Supervision (BCBS) published the progress report on adoption of the Basel III regulatory framework in member jurisdictions.
ACPR Implements Updates Related to DPM Version 3.1
The French Prudential Supervisory Authority (ACPR) has implemented, in its information system, updates linked to the Data Point Model (DPM) version 3.1.
EBA Note Examines Transition Risks of Benchmark Rates
The European Banking Authority (EBA) published a thematic note that aims to identify and raise awareness of the transition risks of benchmark rates, as the London Interbank Offered Rate (LIBOR) and the Euro Overnight Index Average (EONIA) are close to being phased out.
