Chinese insurance companies must have at least two independent directors, according to a new regulation promulgated by the country's insurance industry watchdog, the China Securities Journal reported on Wednesday.

 

The regulation, aimed at improving the management structure of insurance companies, was released by the China Insurance Regulatory Commission (CIRC).

 

It tries to enhance the role of the board of directors in insurance and will gradually make independent directors account for more than one third of the total board, CIRC Chairman Wu Dingfu told the journal.

 

Independent directors are believed to play a unique and impartial role in guiding and supervising the corporate business of joint-stock companies, as they have no share or related interests.

 

According to the regulation, if the board of directors refuses to accept suggestions from independent directors, two or more of the independents have the right to ask the board to convene a temporary shareholder meeting.

 

The CIRC will set in place a series of follow-ups and detailed provisions to make the regulation more feasible, said Wu.

 

(Xinhua News Agency February 9, 2006)