The Measures optimize the original system from the aspects of improving the management of related parties, strengthening the internal control system of related party transactions, strengthening the external supervision of related party transactions, strengthening the penetration supervision of related party transactions, and strengthening the supervision responsibilities.
What is Major Related Transactions
According to the Measures, the affiliated transaction of an insurance company refers to the transfer of resources or obligations between an insurance company and its affiliated parties, including investment in shares, capital utilization, interest transfer, insurance business, provision of goods or services and other possibilities determined by the Banking Insurance Regulatory Commission on the basis of the principle of substance over form. Matters that can lead to the transfer of resources or obligations of insurance companies.
In light of the business development and management characteristics of insurance companies in recent years, the Measures clarify the standards for major related transactions in accordance with the principle of focusing on the big and reducing the small.
Major affiliated transactions refer to transactions between an insurance company or its holding subsidiary and an affiliated party with a cumulative transaction amount of more than 30 million yuan per year and accounting for more than 1% of the audited net assets of the insurance company at the end of the previous year. If the cumulative transaction amount between an insurance company or its holding subsidiary and an affiliated party reaches the standard of the preceding paragraph in one year, the subsequent affiliated transaction, if the cumulative transaction amount reaches the standard of the preceding paragraph again, shall be recognised as a major affiliated transaction.
The Measures further improve the proportion of supervision of related party transactions in the use of funds, establish the upper limit of the proportion, and control the overall risk of related party transactions.
The investment balance of the insurance company to all the related parties shall not exceed 30% of the total assets of the insurance company at the end of the previous year and the lower amount of the net assets of the insurance company at the end of the previous year; the investment of the insurance company in unlisted equity assets, real estate assets and their related assets shall meet the following proportions. Among the book balances of his financial assets and overseas investments, the amount of investment in the affiliated party shall not exceed 50% of the above-mentioned investment limits for all kinds of assets; the total investment balance of the insurance company to the single affiliated party shall not exceed 15% of the total assets of the insurance company at the end of the previous year; and the insurance company shall invest in financial products if the underlying capital is used. The property involves the controlling shareholder or the related party of the controlling shareholder, and the share of the insurance company in purchasing the financial product shall not exceed 60% of the total amount of the product issued.
The Interim Measures for the Management of Associated Transactions of Insurance Companies formulated more than ten years ago can no longer meet the needs of risk prevention and strong supervision. The person in charge further said, First, the regulatory system is not perfect, there is a regulatory gap. For example, the original provisions do not clarify the management responsibilities of insurance companies for affiliated transactions of subsidiaries, leading some actual controllers to take subsidiaries of insurance companies as capital transfer stations, bypass access to insurance funds, to circumvent the review of affiliated transactions. Second, there are various forms of related party transactions, the original provisions lack of penetrating the regulatory content and means, and there are regulatory blind areas, which are difficult to meet the needs of affirmation of related party transactions. Thirdly, the system is scattered and does not form a unified and comprehensive system, which is not conducive to the operation and implementation.
This Measures clarifies the principles of strict supervision and penetration of supervision, establishes a pre-event, in-event and post-event review and reporting system of related transactions, highlights the key points, and focuses on monitoring the related transactions and large-scale fund use of institutions with imperfect corporate governance, and requires insurance companies to improve their market competitiveness. To control the number and scale of related party transactions, so as to achieve the regulatory objectives of improving the operational independence of insurance companies and preventing the risk of interest transmission.
It is understood that the Measures optimize the original system from many aspects. It is worth mentioning that in addition to strengthening the internal control system of affiliated transactions, the Measures also strengthen external supervision of affiliated transactions. To improve the regulatory review measures, the regulatory authorities may, according to the circumstances, request insurance companies and their affiliates to provide additional relevant materials, or make public inquiries about them. At the same time, the Measures strengthen social supervision and improve the disclosure standards of related party transactions. Insurance companies are required to disclose the related party transactions not only in accordance with accounting standards, but also in accordance with regulatory standards.
In addition, special chapters are set up in the Measures to clarify the responsibilities of management and supervision, requiring relevant parties such as shareholders, directors, supervisors and senior managers of insurance companies to disclose truthfully related information and not to conceal or provide false statements. The CBRC can take regulatory measures against irregularities and related responsible persons according to law, and strengthen the supervision of the responsible subjects.