CHINA Law and Practice Contributed by: Kevin Wang, Global Law Office
financial affairs, organisational institutions, business, accounting and also their respec - tive responsibilities and risks; • decision-making procedures and informa - tion disclosure obligations shall be strictly performed in connection with related-party transactions in accordance with the relevant rules; • the company shall establish and implement a management system of information dis - closure – it shall make public disclosures on documents such as periodic reports, interim reports, prospectuses, offering prospectuses, listing announcements, acquisition reports, etc; and • internal control and risk management shall be established. Corporate governance requirements for com - panies with publicly traded shares are mainly stipulated in the Code of Corporate Govern - ance of Publicly Traded Companies, which was issued by CSRC in 2018. Some requirements are mandatory, while others are voluntary. However, certain provisions seem to be voluntary, but in fact have become quasi-mandatory, because companies may be confronted with unnecessary complications if they have not strictly complied with them in the IPO procedure. 2. Corporate Governance Context 2.1 Hot Topics in Corporate Governance The Company Law was revised on 29 December 2023, and the new rules came into effect on 1 July 2024, with the following hot topics in cor - porate governance arising: • the reform of the registered capital system; • the responsibility of the controlling sharehold - er and actual control person;
• the improvement of the legal representative system; • the corporate governance structure about dual class equity; • the competition between the centralism of the shareholders’ meeting and the centralism of the board; • the enrichment of shareholder derivative lawsuits; • the protection of shareholders’ rights; and • the company autonomy and shareholder discretion in designing the company’s articles of association. The new revisions strengthen the protection of shareholders’ rights and creditors’ economic interests, improve the shareholder investment mechanisms, enhance compliance responsibil - ity of corporate control persons and executives, and allow certain simplifications of the company governance structure. The new Company Law specifically focuses on the issues arising from corporate control right competition, shareholder litigation and director responsibility. In addition, it defines the con - tent scope of articles of association that can be agreed upon by shareholders. It still leaves gaps open on many practical issues and increases the need for professional advice and even legal bat - According to China regulatory rules, publicly traded companies shall disclose environmental information and fulfil social responsibilities such as poverty alleviation. ESG information disclo - sure is one of the obligations that publicly traded companies must fulfil, which requires them to incorporate “environment” , “society” and “gov- ernance” into the concept of enterprise devel - opment. tles for all relevant parties. 2.2 ESG Considerations
166 CHAMBERS.COM
Powered by FlippingBook