The Provisions on the Administration of Reinsurance Business 2010 (“the New Provisions”) have come into effect on July1, 2010 issued by The China Insurance Regulatory Commission (“CIRC”). Meanwhile, the earlier versions of The Provisions on the Administration of Reinsurance Business 2005 (“the Old Provisions”) have been repealed.
The New Provisions have made some improvements on the Old Provisions.
The main amendments are as follows:
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The New Provisions have abolished the reinsurance restrictions.
The Old Provisions specifically required that licensed insurers in China underwriting insurance business offer at least 50% of the amount to be reinsured to at least two of the locally licensed professional reinsurance companies in China. Under the Old Provisions, the 50% quota could not be offered to potential offshore reinsurers unless the original offers to the local reinsurance companies were turned down.
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The New Provisions have narrowed the application scope of the clause about risk units.
The Old Provisions stipulated that the proportion of business ceded to a reinsurer for each risk unit should not exceed 80% of the insured amount or the limit of liability in the direct insurance contract underwritten by the direct insurer. The New Provisions have now clarified that this rule will only apply to direct property insurance businesses (as opposed to life insurance businesses), which is ceded by way of proportional reinsurance.
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The New Provisions have expanded the methods that should be used to assess statutory reserves.
Under the New Provisions, both the direct insurer and the reinsurer are required to adopt consistent assessment methods and assumptions when examining the statutory reserves for the same life insurance business.
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The New Provisions have given new obligations to the insurance broker.
An insurance broker must now inform the cedant of all relevant information concerning the reinsurer in a timely and accurate manner.
“The New Provisions will enhance the reinsurance supervision and management, reduce reinsurance risk, maintain a safe reinsurance market, and improve China’s international competitiveness in the international reinsurance market” commented Edward E. Lehman, Managing Director of Lehman, Lee & Xu.
The New PRC Patent Implementing Rules
The New PRC Patent Implementing Rules have come into effect on January 1, 2010. They apply not only to the state-owned companies, but also to all the non-governmentally controlled companies in mainland China. The highlight of The New PRC Patent Implementing Rules is new provisions regarding service invention. In Chapter Six, the regulations lay down a general requirement that reasonable compensation is required to be paid upon the grant of a patent on an invention created by an employee during employment upon the exploitation or transfer of the patent. The amount of the reward should be agreed to between the parties, and then put in writing. In the absence of any agreement, the New PRC Patent Implementing Rules prescribe a certain minimum level of compensation.
In comparison with the old rules, the new rules have increased the minimum level of payments. Under the New PRC Patent Implementing Rules, in the absence of any specific provisions in company rules or policies or employment contracts, the following minimum standards apply with regard to employee inventions:
· Within three months from the date on which a patent is officially published, a lump sum reward of no less than RMB3,000 is required to be paid in relation to invention patents. The minimum payment for a utility model or design patent is RMB1,000.
· If, during the term of a patent, a patent is being exploited, a gross sum is required to be paid on a yearly basis as follows: not less than 2% of the annual operating profit derived from the exploitation of the patent for invention or utility model patents or not less than 0.2% of the annual profit derived from the exploitation of the patent for design patent.
· If, during the term of the patent, a patent is licensed to a third party, an employer is required to pay compensation of no less than 10% of the royalty generated from the licensing of the patent. Furthermore, if the suggestions of an employee inventor or designer have been accepted by the employer which culminated in the grant of a patent, an additional bonus is required to be paid to the employee inventor or designer.
All these minimum amount requests are implemented only when the employer and the employee have not reached an agreement about it in their contract or in the company rules and policies.
Lehman, Lee & Xu is a prominent Chinese corporate law firm and trademark and patent agency with offices in Beijing, Shanghai, Shenzhen, Hong Kong, Macau and Mongolia. The firm has also been recognized as one of the top full service as well as intellectual property firms in China by several international magazines. The law firm is managed by Mr. Edward Lehman, a leading expert on corporate law with 20 years of practice experience in Mainland China.
To learn more about us, please visit our website at
www.lehmanlaw.com
.