The use of insurance capital will welcome new regulations.The China Banking and Insurance Regulatory Commission recently issued the "Notice on Strengthening the Supervision of Related Party Transactions in the Use of Funds by Insurance Institutions" (hereinafter referred to as the "Notice").Due to the large volume of insurance-funded related transactions involving a wide range of areas, the "Notice" temporarily became the focus of the industry's attention.
Experts interviewed believe that the "Notice" aims to rectify and curb illegal related-party transactions of insurance capital, and strictly prevent the risk that related parties such as controlling shareholders will hollow out insurance institutions through interest transfer and other behaviors. determination.The "Notice" consolidates the main responsibilities of insurance companies, establishes an accountability and reporting mechanism for connected transactions, clarifies key monitoring and inspection agencies and behaviors, and strengthens the role of industry self-discipline organizations, which is of great significance for regulating the use of insurance funds. .
There are three major risks in improper related party transactions
Insurance funds are large and related transactions are frequent.According to the survey data recently released by the Insurance Asset Management Association of China, in 2021, among the 21.76 trillion yuan of investment assets involved in the survey of insurance institutions, the proportion of investment by insurance companies that entrust related-party insurance asset management companies will be as high as 70%. %.
"The problems of corporate governance are the root cause of many chaos in the industry, and most corporate governance problems related to shareholders' violations of laws and regulations will involve misappropriation, embezzlement, and arbitrage of insurance funds, transfer of benefits, transfer of funds through related-party transactions through the use of funds. property, avoid supervision and hide risks." Zhou Jin, a partner of PwC China's financial industry management consulting, told the "Securities Daily" reporter.
In the process of using insurance funds, affiliated transactions are frequent and regulation is difficult. The harm of non-compliant affiliated transactions cannot be underestimated.According to Cao Deyun, Secretary of the Party Committee, Executive Vice President and Secretary General of the Insurance Asset Management Association of China, there are three main hazards of improper related-party transactions related to the use of insurance funds.
First of all, improper related-party transactions help the ultimate controlling shareholder to use control rights to embezzle insurance funds and damage the legitimate rights and interests of all parties.The separation of ownership and use rights of insurance funds makes it different from equity relationship, creditor's rights relationship, trust relationship or entrustment relationship, and it is relatively difficult to regulate.When insurance funds participate in investment activities that conceal improper affiliated transactions with complex transaction structures and nested transaction contracts, insurance consumers cannot identify improper affiliated transactions, and it is difficult to protect their own rights and interests.In addition, improper affiliated transactions occupy or embezzle insurance funds over time, which affects the continuous operation of the insurance company and damages the company's value.
Secondly, improper related transactions deliberately conceal the true flow of funds, gradually hollowing out insurance institutions and disrupting the order of market operations.Improper affiliated transactions manipulate surplus funds, use information asymmetry to decorate reports, and conduct circular and false capital injections, which affect the effective allocation of market resources.Improper related-party transactions ignore the decision-making powers and responsibilities of the board of directors and senior management of insurance institutions, and transfer interests in violation of regulations, becoming a "cash machine" for some major shareholders, actual controllers, and ultimate controlling shareholders.
Furthermore, improper related party transactions that evade various governance and guarantee mechanisms can easily damage the insurance industry and consume a lot of social resources.The complexity of improper related-party transactions aggravates the problem of information asymmetry, invalidates the coordinated management of funds, assets and capital of insurance institutions, and raises standardized operating costs.The concealment of improper affiliated transactions conceals the act of “hollowing out”. Insurance institutions with serious insolvency due to improper affiliated transactions must invest a lot of regulatory and social resources to investigate, rectify, take over, reorganize, and liquidate, and increase risks disposal costs.
China Banking and Insurance Regulatory Commission strengthens supervision in multiple dimensions
In the face of many risks in the process of related party transactions, the China Banking and Insurance Regulatory Commission has issued a number of documents before, and this "Notice" further refines the compliance requirements for related party transactions.
Zhou Jin said that the "Notice" is another important measure for the regulatory authorities to strengthen the supervision of corporate governance. It aims to strengthen the supervision of related-party transactions in the use of funds, consolidate the main responsibility of insurance institutions, establish an accountability and reporting mechanism for related-party transactions, and clarify the key points. Monitoring and inspection of institutions and behaviors, leveraging the role of industry self-regulatory organizations and other measures are of great significance to effectively control industry chaos and regulate the use of funds.
Chen Jinsong, director of the Financial Supervision and Compliance Department of Beijing DHH Law Firm and candidate for the talent pool of independent directors of insurance institutions of the Insurance Industry Association, told the "Securities Daily" reporter that the "Notice" aims to rectify and curb illegal affiliated transactions of insurance funds. , and strictly prevent the risk of "emptying" insurance institutions through interest transfer and other behaviors, and reiterates the determination of the regulators to strictly investigate and punish illegal affiliated transactions.
In terms of compacting the main responsibilities, Chen Jinsong said that the "Notice" requires insurance institutions to strengthen the management of various cooperative institutions, mainly including the establishment of management systems, clear access and exit standards, list management and clear compliance rights and responsibilities.Insurance institutions should strengthen the management mechanism of cooperative institutions on the basis of the current whitelist.
Zhou Jin said that the "Notice" requires insurance institutions to strengthen the identification and management of related parties through effective systems, procedures and methods and methods of big data.
"For the internal management of related-party transactions, public information disclosure and reporting to regulatory authorities are two external supervision and management mechanisms. The "Notice" further upgrades and refines the disclosure and reporting requirements for related-party transactions in the use of funds. For the first time, the "Notice" clarifies that statutory prohibitions Written reporting requirements for publicly disclosed, non-disclosed, exempted, or exempted from disclosure related-party transaction information on the use of funds, and the reporting time limit has been determined." Chen Jinsong said.
The "Notice" requires that insurance institutions shall not evade the review of related-party transactions by concealing or concealing related relationships, entrusted equity holdings, asset holdings, drawer agreements, yin-yang contracts, split transactions, mutual investment in major shareholders, etc. or regulatory requirements.The "Notice" emphasizes that the supervision of related-party transactions in the use of funds by insurance institutions should focus on monitoring and inspecting four types of institutions and behaviors, including financial control platforms with capital operation as their main business or insurance institutions invested and established by invisible financial control platforms.
In this regard, Chen Jinsong believes that the four types of behaviors prohibited by the "Notice" are all problems discovered by regulatory agencies or exposed by the industry in recent years, and further expand the scope of insurance institutions that focus on monitoring.
The "Notice" also requires insurance institutions to establish an internal accountability mechanism and a whistle-blowing mechanism for the use of special funds for related-party transactions, propose situations where accountability can be mitigated, and clarify the whistle-blower reward mechanism and whistleblower protection mechanism.In this regard, Chen Jinsong said, "Affiliated transactions are relatively concealed, and the two types of mechanisms help to detect and investigate illegal activities, curb illegal related transactions, and have a deterrent effect."
Our reporter Su Xianggao
(Editor in charge: Jiang Ninglu)
