Department of Listed Company Supervision of China Securities Regulatory Commission, Listed Company Governance Guidelines (Draft for Comments)

Issued: September 11 2001

Main contents: The Guidelines contain 90 articles in six parts. It is stated in the beginning that the basic objective of corporate governance is protection of shareholder interests (Article 1). Therefore, a listed company shall establish a corporate governance structure that ensures the right of the shareholders to know and participate in major matters of the company (Article 2). In addition, this structure should ensure the equal treatment of all shareholders, particularly medium and small shareholders and foreign shareholders (Article 3). The Guidelines provide that the controlling shareholder of the company has a fiduciary obligation to the other shareholders and that it must be separated from the company in terms of staff, assets and accounts (Articles 13 and 17). Shareholders are encouraged to bring civil suits against the company if their lawful rights are violated by the company (Article 24). According to the Guidelines, corporate governance shall also protect the lawful rights of interested parties, such as creditors, employees, consumers, suppliers and communities (Article 74). The company shall provide such information and facilities as necessary to safeguard the interests of these parties (Article 75). The Guidelines provide that information disclosure is a continuing obligation of the company (Article 80). The company shall disclose information at such time and in such manner as would provide all shareholders an equal chance to receive the information (Article 82). The Guidelines also contain detailed provisions relating to the obligations of the directors and the role of the board of supervisors (Parts Two and Three).
Related legislation: PRC, Company Law (Amended), Oct 27 2005, CLP 2005 No.10 p21 and PRC, Securities Law (Amended), Oct 27 2005, CLP 2006 No.1 p31