People's Bank of China, System of Independent Directors and External Supervisors of Share System Commercial Banks Guidelines

Promulgated: June 4 2002
Effective: as of date of promulgation
Interpreting authority: People's Bank of China
Applicability: The Guidelines apply to share system commercial banks established in the PRC (Article 32).

Main contents: The Guidelines contain provisions regarding qualifications, appointment, dismissal and resignation, rights and responsibilities, and remuneration of independent directors and external supervisors. A person is disqualified from being an independent director or external supervisor of a commercial bank if: he has a material interest, such as a substantial shareholding, employment relations or business relations in that commercial bank; if he has committed any crime of corruption, bribery or embezzlement; has been a director or manager of a company that has gone into bankruptcy due to poor management; or he is a government official (Articles 2 to 4). A commercial bank shall have at least two independent directors and two external supervisors (Article 7). Their appointment is subject to qualifications review by the People's Bank of China (Article 11). The board of directors of a commercial bank shall set up an affiliated transaction control committee and a nomination committee mainly comprising and headed by independent directors (Article 24). The audit committee in the board of supervisors shall be headed by an external supervisor (Article 27). If proposed by half of the independent directors or external supervisors, a commercial bank shall convene a provisional shareholders' general meeting (Articles 22 and 28).
Related legislation: PRC, Company Law (Amended), Oct 27 2005, CLP 2005 No.10 p21; PRC, People's Bank of China Law, Mar 18 1995, CLP 1995 No.5 p23 and PRC, Commercial Banking Law, May 10 1995, CLP 1995 No.5 p32