The circular, effective 20 January 2011, prohibits insurance companies and insurance asset management companies from providing guarantees to third parties for the debt of others, with the exception of the following guarantees provided in the ordinary course of business:
- guarantees provided in the course of litigation;
- export credit security provided by export credit insurance companies; and
- maritime security.
Insurance group companies can only provide guarantees for debts of their subsidiaries. External guarantees prohibited by the circular and issued before 20 January 2011 should be reported to the CIRC and in principle should be terminated by 30 June 2011. The circular directs insurance institutions to review their articles of association and internal governance systems and make any necessary amendments to ensure compliance with the general prohibition on external guarantees. Amendments to the articles of association should then be submitted to the CIRC for approval