China's National Financial Regulatory Administration published a decision amending several regulatory rules to align financial institution governance and related-party transaction requirements with the revised PRC Company Law, which took effect on 1 July 2024. The changes allow trust companies to replace the board of supervisors with a board-level audit committee in certain cases and expand board or shareholders meeting approval requirements for related-party transactions involving directors, supervisors and senior management. For trust companies, the amended provisions in the Trust Company Administration Measures and the Interim Measures for Trust Company Equity Management clarify that an audit committee composed of directors may exercise the powers of the board of supervisors, in which case a separate board of supervisors is no longer required. On related-party transactions, amendments to the Measures for Administration of Related-party Transactions of Banking and Insurance Institutions add approval requirements so that transactions between a banking or insurance institution and its directors, supervisors, senior management or their related parties must be approved by the board or shareholders meeting, with “senior management” defined at the legal entity level and excluding branch management, and “close relatives” determined by applicable laws and regulations. For day-to-day financial products and services provided by the institution where both single and cumulative transaction amounts do not meet the major related-party transaction threshold, the decision permits a simplified approach through a unified board or shareholders meeting resolution rather than transaction-by-transaction review, and it retains existing exemptions for certain cases such as demand deposits and specified independent directorship scenarios. Institutions choosing to have the audit committee perform the board of supervisors’ functions are expected to complete the necessary governance procedures, including amendments to articles of association and relevant appointments. Firms are also expected to update internal rules, business processes and systems to implement the expanded related-party transaction approval requirements.
China Banking and Insurance Regulatory Commission 2025-05-20
China's National Financial Regulatory Administration amends trust company governance rules and tightens approval of insider related-party transactions
China's National Financial Regulatory Administration amended rules to align financial institution governance with the revised PRC Company Law effective 1 July 2024. Trust companies may replace the board of supervisors with a board-level audit committee. Expanded approval requirements for related-party transactions now include directors, supervisors, and senior management. Simplified approval processes are introduced for financial products and services not meeting major transaction thresholds.