The China Securities Regulatory Commission has launched a special action on corporate governance for listed companies starting in April, aimed at driving implementation of the recently revised Listed Company Governance Code and related requirements and positioning governance as a first line of defence against financial fraud. The programme is framed around practical implementation, targeted interventions in key risk areas and coordination between company self-governance and regulatory constraints. The action focuses on eight areas. It will strengthen the capability and accountability of board secretaries, including issuing supervisory rules and requiring companies with long-standing vacancies to appoint replacements and to replace individuals who do not meet competence requirements. It supports third-party nomination of independent directors, including public nominations by the investor services centre via open solicitation and coordinated exercise of shareholder rights, and encourages participation by public fund managers. Audit committees are encouraged to conduct targeted reviews of annual-report and internal-control audit qualifications and other financial red flags, with support for audit committees to report issues to the regulator. Listed companies involved in financial fraud and with pay linked to performance are expected to claw back excess executive incentive pay associated with false results and to improve internal remuneration governance. Controlling shareholders will be pressed to return misappropriated company funds, while boards, audit committees and other significant shareholders are supported in pursuing civil recovery alongside enforcement actions. The programme also supports the investor services centre’s shareholding-based exercise of shareholder rights as a complement to administrative supervision, promotes integration of business and finance systems through digitalisation to improve consistency between operational and accounting data and internal control effectiveness, and includes training on the governance code and dissemination of typical cases as the action progresses.
China Securities Regulatory Commission 2026-04-10
China Securities Regulatory Commission launches listed-company governance special action to implement revised governance rules and strengthen fraud prevention
The China Securities Regulatory Commission has launched a special corporate governance action for listed companies to implement the revised Listed Company Governance Code and strengthen governance against financial fraud. The programme targets eight areas, including tighter requirements for board secretaries, enhanced independent director nomination, stronger audit committee scrutiny of financial red flags, clawback of executive pay tied to fraud, recovery of misappropriated funds from controlling shareholders, expanded shareholder-rights exercises by the investor services centre, greater business–finance digital integration, and training.