Memorandum of Understanding on the Joint Punishment of Subjects who Breach Trust in the Field of Insurance

Notice Issuing the

Memorandum of Understanding on the Joint Punishment of Subjects who Breach Trust in the Field of Insurance.

To all provinces, autonomous regions, municipalities directly controlled by the central government, and to relevant departments and institutions of the Xinjiang Production and Construction Corps:

In order to comprehensively implement the spirit of the 18th Party Congress, and of the 3rd, 4th, 5th, 6th, Plenums, to implement the requests of such documents as the “State Council Opinions on Promoting Safe Competition and Safeguarding the Normal Order of the Market” (State Council Document no. 20 [2013]), the “State Council Opinions on Accelerating the Development of a Modern Insurance Sector” (State Council Document no. 29 [2014]), the “State Council Notice Issuing the Planning Outline on the Construction of a Social Credit System (2014-2020)” (State Council Document no. 21 [2014], and the “State Council Guiding Opinion on Improving the System of Joint Incentives and Joint Punishments and Accelerating the Construction of a Social Credit System” (State Council Document no. 3 [2016]), the construction of credit in the insurance industry shall be accelerated, and the formation of a powerful joint force to praise integrity and punish breaches of trust shall be promoted.

The National Development and Reform Commission, the People’s Bank of China, the Insurance Regulatory Commission, the Central Organization Department, the Public Sector Reforms Commission, the Central Spiritual Civilization Office, the Cyberspace Administration, the Supreme People’s Court, the Ministry of Industry and Information Technology, the Ministry of Public Security, the Ministry of Human Resources Social Security, the Ministry of Land and Natural Resources, the Ministry of Environmental Protection, the Ministry of Housing and Rural and Urban Construction, the Ministry of Transport, the Ministry of Water Resources, the Ministry of Commerce, SASAC, the General Administration of Customs, the General Administration of Taxation, SAIC, AQSIQ, the China Food and Drug Administration, CRBC, CSRC, the State Administration of Civil Service, the Civil Aviation Bureau, the Foreign Exchange Bureau, the Communist Youth League, and the China Railway Corporation have signed the Memorandum of Understanding on the Joint Punishment of Subjects who Breach Trust in the Field of Insurance. The Memorandum of Understanding is hereby notified to you, please conscientiously implement it.

Annex: Memorandum of Understanding on the Joint Punishment of Subjects who Breach Trust in the Field of Insurance.

National Development and Reform Commission,

People’s Bank of China,

Insurance Regulatory Commission,

Central Organization Department,

Public Sector Reforms Commission,

Central Spiritual Civilization Office,

Cyberspace Administration,

Supreme People’s Court,

Ministry of Industry and Information Technology,

Ministry of Public Security,

Ministry of Human Resources Social Security,

Ministry of Land and Natural Resources,

Ministry of Environmental Protection,

Ministry of Housing and Rural and Urban Construction,

Ministry of Transport,

Ministry of Water Resources,

Ministry of Commerce,

SASAC,

General Administration of Customs,

General Administration of Taxation,

SAIC,

AQSIQ,

China Food and Drug Administration,

CRBC,

CSRC,

State Administration of Civil Service,

Civil Aviation Bureau,

Foreign Exchange Bureau,

Communist Youth League,

China Railway Corporation

August 28, 2017

Annex

Memorandum of Understanding on the Joint Punishment of Subjects who Breach Trust in the Field of Insurance.

In order to comprehensively implement the spirit of the 18th Party Congress, and of the 3rd, 4th, 5th, 6th, Plenums, to implement the requests of such documents as the “State Council Opinions on Promoting Safe Competition and Safeguarding the Normal Order of the Market” (State Council Document no. 20 [2013]), the “State Council Opinions on Accelerating the Development of a Modern Insurance Sector” (State Council Document no. 29 [2014]), the “State Council Notice Issuing the Planning Outline on the Construction of a Social Credit System (2014-2020)” (State Council Document no. 21 [2014], and the “State Council Guiding Opinion on Improving the System of Joint Incentives and Joint Punishments and Accelerating the Construction of a Social Credit System” (State Council Document no. 3 [2016]), the construction of credit in the insurance industry shall be accelerated, and the formation of a powerful joint force to praise integrity and punish breaches of trust shall be promoted.

The National Development and Reform Commission, the People’s Bank of China, the Insurance Regulatory Commission, the Central Organization Department, the Public Sector Reforms Commission, the Central Spiritual Civilization Office, the Cyberspace Administration, the Supreme People’s Court, the Ministry of Industry and Information Technology, the Ministry of Public Security, the Ministry of Human Resources Social Security, the Ministry of Land and Natural Resources, the Ministry of Environmental Protection, the Ministry of Housing and Rural and Urban Construction, the Ministry of Transport, the Ministry of Water Resources, the Ministry of Commerce, SASAC, the General Administration of Customs, the General Administration of Taxation, SAIC, AQSIQ, the China Food and Drug Administration, CRBC, CSRC, the State Administration of Civil Service, the Civil Aviation Bureau, the Foreign Exchange Bureau, the Communist Youth League, and the China Railway Corporation have reached the following consensus on the enforcement of joint punishments on subjects who breach trust in the field of insurance:

I. Subjects of Joint Punishment

Subjects of joint punishment are all types of insurance institutions, insurance industry staff, and other institutions and staff performing activities on the insurance market that according to the lawful determinations of insurance supervision departments, have engaged in serious misconduct or in conducts breaching trust. (Hereinafter they are referred to as ‘parties who engage in misconduct or breach trust in the field of insurance’).

II. Joint Punishment Measures

(1) Limiting access to accreditations by certification institutions.

Parties who engage in misconduct or breach trust in the field of insurance will see limitations in the award of certifications, their access to accreditations by certification institutions shall be limited, their access to certifications shall be limited.

(2) Consideration in the approval of applications to establish securities companies, fund management companies, futures companies.

The record of misconduct and breaches of trust of parties who engage in misconduct or breach trust in the field of insurance shall be the basis of, or it shall be considered in their applications to establish financing guarantee companies, micro-finance companies. It shall be a major factor to consider in the approval of the establishment of securities companies, fund management companies and futures companies as well as in changes in shareholders holding more than 5% of shares, in the actual controller, in the registration of private investment funds managers, in other important matters, and in the filing of equity funds.

(3) Establishing commercial banks, branches or representative offices.

The record of misconduct and breaches of trust of parties who engage in misconduct or breach trust in the field of insurance shall be considered during the approval of applications to establish commercial banks, branches, or representative offices.

(4) Approval of applications for the issuance of corporate bonds and the issuance of corporate bonds on the interbank market.

The record of misconduct and breaches of trust of parties who engage in misconduct or breach trust in the field of insurance shall be a major factor to be considered in their applications to issue corporate bonds or corporate bonds on the interbank market.

(5) Major factor to be considered in stock issuance audit and in the open transfer of equity through the National Equity Exchange and Quotation System.

The record of misconduct and breaches of trust by parties who engage in misconduct of breach trust in the field of insurance shall be a major factor to be considered in applications to issue equity and in transfers of equity through the National Equity Exchange and Quotation System.

(6) Major consideration in the ex post and ex durante supervision of implementation of equity incentive schemes by companies listed in China, or where relevant staff becomes and object of equity incentive schemes.

The record of misconduct and breaches of trust of parties who engage in misconduct or breach trust in the field of insurance shall be a major factor to be considered in the ex post and ex durante supervision of implementation of equity incentive schemes by companies listed in China, or where relevant staff becomes an object of equity incentive schemes.

(7) Major focus in the ex post and ex durante supervision of listed companies or unlisted public companies.

A major focus shall be placed on serious misconduct by responsible parties during the ex post and ex durante supervision of listed companies or unlisted public companies.

(8) Partial limitations to consumption.

The building of new housing, extending existing housing, high-grade renovation of housing, the purchase of vehicles not essential to business, as well as other forms of consumption not essential to life and to business of parties who engage in misconduct or breach trust in the field of insurance and have been included in the people’s courts’ list of persons subject to enforcement shall be limited according to the law. Consumption activities relevant to the “Supreme People’s Court Regulations on Limiting High Consumption and Consumption by Persons Subject to Enforcement”, as travel by plane, by train in soft-sleeper class, travel by high-speed rail, and travel in first class on other multiple-unit trains shall be limited.

(9) Consideration in applications to provide internet information services.

The record of misconduct and breaches of trust of parties who engage in misconduct or breach trust in the field of insurance shall be considered in their application to provide internet information services.

(10) Consideration in credit financing by financial institutions.

The record of misconduct and breaches of trust of parties who engage in misconduct or breach trust in the field of insurance shall be major factor to be considered in credit rating, loan financing, management and exit.

(11) Limiting participation to government procurement activities.

The participation as suppliers to government procurement activities of parties who engage in misconduct or breach trust in the field of insurance shall be limited according to the law.

(12) Limiting access to government subsidized funds and to social security funds.

Parties who engage in misconduct or breach trust in the field of insurance shall have their applications to government subsidized funds and to social security funds limited.

(13) Consideration in the choice to participate to public-private partnership projects.

The record of misconduct and breaches of trust of parties who engage in misconduct or breach trust in the field of insurance shall be a factor to consider in the choice to participate to public-private partnership projects.

(14) Strengthening day-to-day supervision and inspection.

Relevant units may consider parties who engage in misconduct or breach trust in the field of insurance during their market supervision, on-site inspection and other work.

(15) Consideration in the appointment as legal representative, director, or supervisor of state-owned enterprises.

The record of misconduct and breaches of trust of parties who engage in misconduct or breach trust in the field of insurance shall be a major factor to be considered in appointments as director, supervisor of wholly state-owned enterprises, in appointments as director, supervisor in state-owned capital investment companies, or state-controlled companies, and as high level manager in state-owned enterprises.

(16) Limiting registration as the legal representative of public service institutions.

Parties who engage in misconduct or breach trust in the field of insurance shall be limited in their registration as the legal representative of public service institutions.

(17) Limiting appointments as director, supervisor, high level manager of financial institutions.

Where a party who engages in misconduct or breaches trust in the field of insurance is a natural person, his appointment as director, supervisor, high level manager of banking financial institutions, insurance companies, insurance asset management companies, financing guarantee companies shall be limited according to the law. His record of misconduct and breaches of trust shall be considered in the appointment as director, supervisor, and high level manager of securities companies, financial management companies, futures companies, and as the responsible person of branches thereof.

(18) Consideration in the recruitment (hiring) as civil servants or staff of public service institutions.

Where a party who engages in misconduct or breaches trust in the field of insurance is a natural person, his record of misconduct and breaches of trust shall be a major factor to be considered in the recruitment (hiring) as civil servants or staff of a public service institution.

(19) Limitation to the award of honorary titles.

Parties who engage in misconduct or breach trust in the field of insurance shall have their participation in appraisals as excellent or outstanding, as well as their award of all kinds of honorary titles, limited. Relevant honorary titles already awarded shall be revoked.

(20) Prudent consideration in tax credit management.

The record of misconduct and breaches of trust of parties who engage in misconduct or breaches of trust in the field of insurance shall be the basis of prudent consideration of their credit information and credit evaluation in the management of tax credit.

(21) Prudent consideration in the approval and management of foreign exchange.

The record of misconduct and breaches of trust of parties who engage in misconduct or breaches of trust in the field of insurance shall be prudently considered in the examination and approval of foreign currency business, as well as in the examination and approval as qualified foreign institutional investor, and in the examination and approval of quotas as qualified domestic institutional investor.

(22) Consideration in the restriction of the enjoyment of preferential policies.

Information related to breaches of trust by institutions who engage in misconduct or breaches of trust in the field of insurance, and by their legal representatives, actual controllers, directors, supervisors, senior managers, shall be considered in limiting their enjoyment of preferential policies.

(23) Lawful limitation of the status as customs certified enterprise.

Where parties who engage in misconduct or breaches of trust in the field of insurance apply for certification as a customs certified enterprise, such certification shall be denied. Those who have already obtained such a certification shall have their company credit rating downgraded according to regulations.

(24) Intensified supervision over import and export.

Where parties who engage in misconduct or breaches of trust in the field of insurance conduct customs clearance, a strict supervision over the import and export of goods shall be enforced. Documents audit, targeted inspection, or follow-up inspection shall be intensified.

(25) Restricting access to government-supplied land according to the law.

Information related to breaches of trust by parties who engage in misconduct or breaches of trust in the field of insurance shall be considered in restricting access to government-supplied land.

(26) Consideration in restricting participation to bidding on government invested engineering construction projects.

Information related to breaches of trust by parties who engage in misconduct or breaches of trust in the field of insurance shall be considered in restricting applications to participate in bidding on government invested engineering construction projects.

(27) Consideration in limitations to the transfer of rights and interests in toll roads.

Information related to breaches of trust by parties who engage in misconduct or breaches of trust in the field of insurance shall be considered in limiting the transfer of rights and interests in toll roads.

(28) Dissemination to the public through the “Credit China” website, the National Enterprise Credit Information Publicity System and other major news sites.

Information on parties who engage in misconduct or breaches of trust in the field of insurance shall be published through the “Credit China” website, and the National Enterprise Credit Information Publicity System. At the same time, relevant internet news websites service units shall coordinate to disseminate such information to the public.

III. Information sharing and implementation of joint punishments

The China Insurance Regulatory Commission shall provide information on parties who engage in misconduct or breach trust in the field of insurance to the signatories of the Present Memorandum of Understanding and to other departments and units through the National Credit Information Sharing Platforms, and it shall dynamically update information according to relevant provisions.Other departments and units that obtain information about misconduct and breaches of trust in the field of insurance from the Reward and Punishment Subsystem of the National Credit Information Sharing Platform shall use such information as a major factor to consider in fulfilling their duties according to the law. They shall, according to the content of the Present Memorandum of Understanding, to the law, and to regulations, enforce punishment on parties who engage in misconduct or breach trust in the field of insurance, and gradually establish a mechanism to regularly notify the results of punishments. Departments where conditions exist shall provide regular feedback on the status of the enforcement of joint punishment to the National Development and Reform Commission and to CIRC via the National Credit Information Sharing Platform.

IV. Continuously managing shared information

Where it provides information about misconduct and breaches of trust by parties in the insurance sector to all other units, CIRC shall specify the date and validity period of the decision it has made. Each relevant unit shall enforce punishment, or lift punishment according to its statutory authority, the law, regulations, and relevant stipulations. Joint punishments shall not be implemented beyond the period of their validity. Where parties who engage in misconduct or breach trust in the field of insurance take the initiative to rectify their misconduct and breaches of trust within the prescribed period, and to eliminate externalities, joint punishment may no longer be enforced on them according to the law, regulations, and relevant stipulations.CIRC shall provide relevant information to all units in a timely fashion, and all units shall, after making the decision to lift punishment, provide feed back on relevant circumstances to the Development and Reform Commission and to CIRC.

V. Other Matters

All units should work closely together to actively implement the Present Memorandum of Understanding. They shall enact detailed implementation rules and procedures on the use, management, supervision of information on misconduct and breaches of trust, and guide subordinate units to enforce punishment measures on parties who engage in misconduct or breach trust in the field of insurance, according to the law and to their authority. Specific operational problems that may arise during implementation shall be solved separately by each department through consultation.

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