Compliance with the amended Company Law represents a significant development for businesses and investors, especially because it is only one amongst a raft of legislative changes currently happening in the PRC. In fact, we are only at one confluence point during a very complex legislative period. And we need time to see the longer-terms effects of the laws.
Businesses and investors operating in the PRC, or planning to enter the market, are advised to seek specialized legal and taxation advice, undertake careful due diligence as well as understand the updates to comply with the newest legal standards. Strategies to mitigate the potential risks stemming from the new legislation are also appropriate. In fact, quite a few of our clients have been working on compliance since the law was ratified.
Even at this early stage, it’s clear the amended PRC Company Law – with the increased onus placed on individual accountability – is having a big impact on our clients. Increased personal accountability exposes those who are investors, business owners, entrepreneurs, or a combination of the three, to the risks of personal debt obligations and litigation potential.
The purview of the legislation is broad, and so too are more oblique investment methods, such as investing via the provision of technology. Therefore, careful due diligence is required.
Our observation is that clients are keenly looking for solutions that can safeguard or ringfence their private wealth from business assets and obligations while complying with the new requirements.
Safety and stability are paramount during a time of change, and HNW clients are getting second or even third opinions on how to segregate personal and company wealth.
To protect their family wealth, HNW individuals are increasingly using tools such as life protection. Life protection solutions can also facilitate wealth management and the transfer of assets to future generations. We are seeing client interest in large life protection policies with premiums between CNY 40M and CNY 100M with sum assured as high as CYN 200M and higher.
Annuity solutions such as income plans are also ever more popular as the solutions provide very stable cash value growth and inward cash flow into the future. Many clients can benefit from having both types of policies and are likely to incept both, in time, as they experience the benefits of life protection solutions.
HNW clients are also talking up keyperson insurance, such as Directors and Officers Liability Insurance, for their business-critical executives to balance the increased individual risks and help secure business continuity.
As professional insurance broker, PCS by Mercer consultants assess how best to meet our clients’ changing needs from several perspectives, before offering solutions. Further, we have access to a breadth of insurers, so we can service our clients’ needs with the competitive products and pricing.
1 Patrick Wang is an Executive Director at Private Client Services by Mercer China Limited.
Patrick has over 19 years’ experience in the financial services and Private Client Services industry. Prior to joining PCS, Patrick was with CITI Bank, HSBC Bank and Hang Seng Bank Limited, China.
Patrick holds a Bachelor of Computer Science degree from Shanghai University, China and a Master’s in Business Administration from Georgia Southern University, USA.
He is fluent in English and Mandarin.
