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Amendments to the Regulations Governing Permission for Establishment of Branch Units and Subsidiaries in Hong Kong and Macau by Taiwan-area Insurance Institutions

Trisha Chang/Jade Wang


To improve the supervision and to encourage insurance enterprises to expand abroad, the FSC issued the amended Regulations Governing Permission for Establishment of Branch Units and Subsidiaries in Hong Kong and Macau by Taiwan-area Insurance Institutions ("Regulations"), per the letter Ref. No. Jin-Guan-Bao-Zong-Zi No. 10400947961 dated October 7, 2015. The main points are as follows:
 
1.        Clarify the definitions of insurance institution and subsidiary
 
       Clearly stipulate the definition of insurance enterprises which include insurance companies, insurance brokerage companies, insurance agent companies and insurance surveyor companies and amend the definition of subsidiary pursuant to the Company Act.
 
2.         Amendment to the qualifications and required documents for insurance institutions to apply for establishing branch units and subsidiaries in Hong Kong and Macau, as well as regulations relating to approval, recordation, registration and disclosure required of insurance institutions
 
(1)      Qualifications of insurance institutions
 
a.         Insurance enterprises shall meet the following conditions:
 
                                        (a).      sound business performance and credible financial capability in the most recent three (3) years;
 
                                        (b).      the risk-based capital ("RBC") ratio in the most recent period is 250% or higher and after deducting the amount of the investment under application the RBC is 200% or higher;
 
                                        (c).      the company has not been subject to sanction by the competent authority in the most recent three (3) years, or has been sanctioned but specific remedial actions have been taken and the improvement has been approved by the competent authority;
 
                                        (d).      the company has no record of deficiency in the implementation of risk management in the most recent year or there has been a record of deficiency but specific remedial actions have been taken and the improvement has been approved by the competent authority;
 
                                        (e).      sound internal control systems; and
 
                                         (f).      there are no other facts indicating that the sound business operations of the enterprise are likely to be adversely affected.
 
b.         Insurance brokerage companies, insurance agent companies and insurance surveyor companies shall meet conditions (a) and (c) above.
 
(2)      The qualification of the proposed responsible person of the representative office set up by an insurance institution shall meet the required qualifications set forth in the Regulations Governing Required Qualifications for Responsible Persons of Insurance Enterprises, the Regulations Governing Insurance Agents, the Regulations Governing Insurance Brokers and the Regulations Governing Insurance Surveyors.
 
(3)      The required documents are the same as what a Taiwan-area insurance institution needs when applying for establishing a branch or subsidiary or a representative offices.
 
(4)      If it is required by the Regulations, the insurance institution shall be approved by or registered with the competent authority. In addition, the insurance institution shall, within four months of annual closing, file information on the branch or the subsidiary in Hong Kong and Macau with the competent authority for approval and recordation. Further, the insurance institution shall comply with the relevant regulations on disclosure.
 
3.         New investment limits for insurance institutions
 
       To avoid concentration risk in Hong Kong and Macau, the Regulations stipulate that the accumulated exclusive operation funds and total amount of investment made by the Taiwan-area insurance institution to set up branch units or subsidiaries in Hong Kong and Macau together with the total amount of investment or technical cooperation in Hong Kong and Macau of Taiwan-area citizens, juristic persons, organizations, or any other institutions shall not exceed forty (40) percent of the owner’s equity of said insurance institution.
 
4.         Mergers between Taiwan-area insurance institutions and insurance institutions of Hong Kong and Macau shall comply with the Regulations.
 

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