China Securities Regulatory Commission launches consultation on revised listed company governance guidelines tightening director duties and controlling shareholder conduct

The China Securities Regulatory Commission has published a draft revision to the Listed Company Governance Standards for public consultation, aiming to further standardise the conduct of directors, senior management, controlling shareholders and actual controllers and to strengthen listed company governance. The proposed changes include a more comprehensive supervisory framework for directors and senior management covering appointment, performance of duties and departure, with an emphasis on faithful and diligent performance. Listed companies would be required to establish a remuneration management system and align directors’ and executives’ pay with company operating performance and individual performance. The draft also tightens expectations for controlling shareholders and actual controllers, including stricter limits on same-industry competition that could have a materially adverse impact on the listed company, and strengthens review responsibilities and decision-making requirements for related-party transactions. Additional provisions align the standards with other rules, including the Securities Law and the Measures for the Administration of Independent Directors of Listed Companies, updating requirements on public solicitation of shareholder rights and clarifying the roles of the board nomination committee and the remuneration and assessment committee. The CSRC will consider feedback received during the consultation and will further revise the standards before issuing them for implementation following the required procedures.