China's National Financial Regulatory Administration tightens insurers’ major equity investments in unlisted companies and sets a five-year transition for legacy deals

China's National Financial Regulatory Administration issued a notice on major equity investments by insurance funds in unlisted enterprises, updating the permitted industry scope and strengthening governance and risk controls for insurance institutions’ equity investment activity. The changes apply to new investments and introduce transitional arrangements for existing holdings. The notice optimises the industry scope for major equity investments to guide insurance funds toward strategic industries and emerging sectors related to the insurance business and aligned with the financial “five major priorities” agenda. It also requires stronger overall management of investee companies, including a clearer equity investment decision-making process and authorisation framework, enhanced internal controls, and clearer accountability for risk management, while warning against using labels such as “broad technology enterprises” to circumvent regulatory requirements. A “new-old split” approach applies, with new equity investments required to comply with the notice, while existing business that does not meet the requirements is, in principle, granted a five-year transition period. Insurance institutions must prepare a rectification plan and implement it after filing with the regulator.