CHINA Law and Practice Contributed by: Kevin Wang, Global Law Office
financial control, documentation and invoice control are essential for small companies. Large and Medium-Sized Companies The board of directors shall be responsible for the establishment and implementation of inter - nal controls. The board of supervisors shall supervise the establishment and implementa - tion of internal controls by the board of direc - tors. Managers shall be responsible for organis - ing and leading the day-to-day operation of the company’s internal controls. A company shall establish a special department or designate an internal department to be specifically responsi - ble for organising and co-ordinating the estab - lishment and implementation of internal controls and daily work. Publicly Traded Companies Special requirements for directors in connection with the risk management and internal controls in publicly traded companies include the follow - ing. • In respect of corporate governance structure, a publicly traded company shall have inde - pendent directors and board secretaries, and its board of directors shall establish an audit committee; it may also establish special com - mittees on strategy, nomination, remuneration and assessment. • In respect of voting rights, the board of direc - tors, an independent director or shareholders holding 1% or more of the voting shares of
a listed company or an investor protection institution may, as a proxy solicitor, publicly request the shareholders of the listed com - pany to authorise it to attend a sharehold - ers’ meeting and exercise the shareholders’ right. The company and the convenor of the shareholders’ meeting shall not set a mini - mum shareholding limit on the voting rights of shareholders. The solicitor shall disclose solicitation documents, and the listed com - pany shall provide co-operation. • In respect of information disclosure, a publicly traded company shall disclose the assess - ment report on internal control approved by the board of directors, and the audit report on internal control over financial reporting issued by the accounting firm at the same time as the annual report. The specific contents of periodic and interim reports can be seen in 6.1 Financial Reporting and 6.2 Disclosure of Corporate Governance Arrangements . • For independent directors, the specific discussion can be seen in 4.5 Rules/Require- ments Concerning Independence of Direc- tors . Overall, with the new Company Law, Chinese companies are given more autonomy in their corporate governance, which leaves more room for them to design their articles of association and to determine the best rules for themselves. It also creates more battlefields for participants in Chinese companies’ corporate governance.
183 CHAMBERS.COM
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