For the protection of borrowers and the stability of the development of insurance markets, the FSC enacted the “Directions for Insurance Companies on Sale of Non-Performing Loans” (the “Directions”) which entered into effect on July 31, 2013.  Highlights of the Directions include: (1) An insurance company shall in principle collect payment for a non-performing loan by itself, but may sell the loan to others (a) upon board resolution if the average overdue loan ratio of the past 4 quarters exceeds 3% and the ratio of capital utilization of the amount of secured loan exceeds 10%, and the collection by the company fails to improve the situation; (b) if the loan is a syndicated loan or if the borrower of the loan is the borrower of a syndicated loan which should be handled together with the syndicated loan; (2) an insurance company shall in principle sell non-performing loans by public tendering pursuant to the Directions, but may, as an exception, individually negotiate a price for the sale of the loan if the loan may be collected in full, has a clear market price, or fails to be sold through public tendering; (3) an insurance company selling non-performing loans shall incorporate the Directions into its internal control and auditing system, and conduct internal audit and self audit pursuant to Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises.