China’s insurance regulator on Tuesday announced a ban on insurers acquiring listed firms in concert with non-insurance parties, in a latest move to limit insurance assets invested in equity markets.

According to new rules set by the China Insurance Regulatory Commission (CIRC), a purchase of at least 20 percent of stock in a listed company by an insurer will be considered a major investment in the future.

The rules say before making such an investment, insurance companies must gain approval from the authority, in addition to stock exchange filings.

The rules also stipulate that when insurance companies make major stock investment in partnership with non-insurance parties, they must use their own funds.

Buying a controlling stake in a listed company, namely acquiring that company, by an insurer together with non-insurance parties will be absolutely not allowed.

Insurance firms also will be restricted to placing no more than 30 percent of their total assets in equities, the CIRC said.

China’s insurance industry has witnessed rapid premium growth over the past two years by cooperating with banks for sales of wealth management products.

However, controversy has come hand in hand with that growth, as it becomes an open secret that many insurers use proceeds from sales to participate in riskier equity markets.

The controversy culminated in 2015 when that practice was adopted by the insurance units of Baoneng, a Chinese financial conglomerate, in its takeover bid for Vanke, once the biggest property developer in China.

Labeling Baoneng’s move a “hostile takeover”, Vanke struggled to dilute the stakes held by Baoneng in a move to avoid takeover, notably by inviting a subway operator in southern Chinese city of Shenzhen to invest in its shares.

The tussle ended up as one of the most dramatic battle on China’s corporate front in recent years.

Some analysts suggested the latest rules could help tackle a mismatch in the duration between insurance funds and their equity investments.

The CIRC said that insurers should be friendly investors and maintain good communications with stake holders and management of the listed companies, so that insurance funds could better facilitate operations.

"Insurance companies should be financial investors in good faith, instead of making hostile takeovers," said Xiang Junbo, chairman of the CIRC, in a meeting last month.

In recent weeks, CIRC has rolled out new rules aimed at limiting risk, by tightening the shareholding structure at insurance firms and limiting how insurance assets are invested.

Those measures include lowering from 51 percent to one-third the biggest stake a single shareholder can take in an insurance firm.