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CSRC Consults Public on Proposed Amendments to Corporate Governance Rules for  Securities Companies 

05 September 2012

The CSRC has issued a consultation draft of revisions to the Corporate Governance Principles of Securities Companies. The proposed amendments will introduce changes to board of directors and supervisory board composition and a requirement for deferred remuneration for senior management personnel, whilst relaxing certain filing requirements currently imposed on securities companies. The consultation period ends on 14 September 2012.


The key amendments proposed in the consultation draft include:

  • New requirements on board composition and other corporate governance structures: New measures and requirements are to be introduced to improve the corporate governance of securities companies, including:
      • the consultation draft clearly provides that shareholder powers prescribed by the PRC Company Law cannot be delegated to the board of directors;
      • lowering the threshold of shareholding that entitles shareholders to nominate directors and supervisors from 5% to 3%, and allowing shareholders with shareholding (individually or jointly) of 1% or more shares to nominate independent director candidates for election;
      • where a shareholder nominates more than half of the directors, such shareholder (unless the sole shareholder) would not be permitted to nominate a supervisor;
      • requiring a securities company to have independent director if it engages in two or more types of business among securities brokerage business, securities assets management business, securities lending business and securities underwriting business;
      • requiring the number of independent directors to be no less than one-fourth of the total number of the directors in certain circumstances, e.g. where the roles of chairperson and general manager are taken by the same person, or more than one-fifth of the directors are internal directors;
      • requiring board and supervisory board meetings to be held by physical meetings or via video-conference other than in exceptional circumstances.
  • Deferred remuneration for senior management personnel: At least 40% of the performance based annual remuneration of senior management personnel should be deferred and paid over a period of at least three years, which payment may be withheld in cases of non-compliance and other irregularities. It is worth noting that this is in line with the Principles for Sound Compensation Practices that is published by the Financial Stability Board.
  • Detailed rules for certain board committees: For example, it is required  that independent directors make up no less than half of the members of the Audit Committee. Detailed duties of the Remuneration and Nomination Committee as well as the Audit Committee are also proposed.
  • Relaxed filing and reporting requirements: Considering the practicability and the cost imposed on securities companies, filing and reporting obligations with respect to certain matters (such as filings of resolutions of shareholders meetings, rules of procedures of the board of directors and the board of supervisors, material connected transactions, etc.) will be relaxed.

Reference:  Rules for Governance of Securities Companies (Consultation Draft) (证券公司治理指引准则(征求意见稿))

Issuing authority: The China Securities Regulatory Commission (“CSRC”).

Any queries can be forwarded to Fang Jian, Annabella Fu or your usual Linklaters contacts.

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