萬國法律事務所

Taiwan’s Financial Supervisory Committee (FSC) announced on 3 August 2010 that it will lift restrictions on local insurers investing in Chinese securities after revising the Regulations Governing Foreign Investments by Insurance Companies.

In response to the promulgation of the Measures Permitting Investment in China by the Ministry of Economic Affairs, the FSC has proposed revisions to the relevant rules governing investment in China in an attempt to remove current restrictions on investment in Chinese securities.

The draft revisions to the Regulations Governing Foreign Investments by Insurance Companies identifies the scope and types of Chinese securities that local insurers are permitted to purchase, which include shares traded in public markets, corporate bonds, government bonds, treasury securities, IPO stocks, securities investment funds and exchange traded funds. The draft revisions further establish qualifications for local insurers and provide that local insurers must have a risk-based capital ratio of no less than 250 percent and have already established a department as well as appointed an official specifically for risk control and management to be eligible to invest in the Chinese market. In addition, eligible insurers must not have a record of being penalized for the most recent year due to violations of insurance regulations in connection with foreign investment.

According to the FSC, an additional two prerequisites must be met for foreign investors to acquire QFII status in China pursuant to the relevant Chinese foreign investment rules. First, foreign investors must be incorporated for more than five years, and second, foreign investors must have held securities valued at an amount of no less than US$ 5,000,000,000 during the most recent fiscal year.

Based on the above requirements, officials from the FSC state that at least four local insurers will be qualified to invest in Chinese securities once the revisions take effect.