National Financial Regulatory Administration, People’s Bank of China, China Securities Regulatory Commission and Ministry of Finance issue governance guidelines targeting a stronger framework by 2029

The National Financial Regulatory Administration, People’s Bank of China, China Securities Regulatory Commission and Ministry of Finance jointly issued guidelines to strengthen governance across financial institutions. By 2029, the authorities aim to establish a governance framework with clear divisions of responsibility, aligned incentives, strict risk management and more effective operations, while improving financial system stability and services to the real economy. The guidelines reinforce Communist Party of China leadership, tighten scrutiny of major shareholders, controlling parties and beneficial owners, and prohibit improper shareholder intervention, concealed control relationships and capital misuse. Financial institutions are expected to improve board effectiveness and independent director oversight, apply longer-term performance assessment, defer and claw back variable remuneration for senior managers and key staff, and strengthen internal controls, audit, related-party transaction management and enterprise-wide risk coverage. Supervision will become more risk-based and use look-through assessments of ownership, control and related-party transactions. Regulators will strengthen governance risk monitoring and early intervention, impose accountability for serious misconduct and governance failures, and expand information disclosure and protections for financial consumers and other stakeholders. The framework applies to institutions approved to conduct financial business, while policy financial institutions and local financial organizations are expected to follow it by reference.