According to documents presented by Primus Financial Holdings Ltd., a Hong Kong-based company that won a bid to take over local life insurance company Nan Shan last year, it is not funded by capital from China, Deputy Minister of Economic Affairs Hwang Jung-chiou said Thursday.

However, Hwang told the Legislative Yuan Finance Committee, the Ministry of Economic Affairs (MOEA) had yet to corroborate the contents of the documents submitted by Primus January 12.

Before the corroboration begins, the ministry has demanded that Primus should submit several other documents requested by the Financial Supervisory Commission and the Council for Economic Planning and Development, Hwang went on.

Hwang said that whether that company is funded with Chinese capital — which would disqualify it from taking over Nan Shan — or by foreign capital, will be determined within two weeks.

Any overseas company with 30 percent of its capital coming from China is considered by the government to be a Chinese company, according to the MOEA.

As to questions over Primus’ agreement with American International Group (AGI) to buy its Taiwan insurance unit — Nan Shan — they will be decided within two months.

Financial Supervisory Commission Chairman Sean Chen reiterated on the same occasion the five criteria the commission has laid down for approving the Primus bid.

The criteria for the would-be buyer are: a promise to protect the benefits of Nan Shan’s policy holders and employees; sufficient capital for the takeover deal; expertise in running insurance business; a promise to run the insurer on a long term basis; and the financial ability to meet Nan Shan’s future needs for capital increase.

Meanwhile Fan Liang-dung, executive secretary of the Investment Commission under the MOEA, told the Legislative Yuan Economics Committee that none of the 44 holders of Primus’ convertible loan stocks are Chinese, although four of them are members of Chinese People’s Political Consultative Conference.

The MOEA is consulting with the Mainland Affairs Council to see if the four holders are Chinese in the eyes of the law, Fan said.

The Economics Committee of the Legislative Yuan resolved that same day to require the Investment Commission to examine the qualifications of anyone who aims to hold more than 10 percent of Nan Shan’s stocks and to prohibit Primus from reselling its stake in Nan Shan within seven years of its acquisition.

Meanwhile, just as the two committees gathered to discuss the Primus bid, a group of Nan Shan employees protested outside the legislature, calling for a thorough examination of the bid.

One of the protesters claimed that the insurance company did not enroll 20,000 of Nan Shan’s 38,000 employees in the National Health Insurance program according to their full salaries and that it failed to withhold enough funds as retirement pensions for its employees.

He urged the government not to approve the acquisition until the existing Nan Shan management rectifies the situation. Primus was chosen by AIG from among several bidders to take over Nan Shan for US$2.15 billion in October 2009. Nan Shan is one of the largest life insurers in Taiwan, with total assets exceeding US$4.6 billion and 7.9 million in-force policies held by about 4 million people.

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