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SASAC Issues Rules on Board of Directors of Central State-Owned Enterprises

Wed, 20 Oct 2021
Categories: China Legal Trends

The State-owned Assets Supervision and Administration Commission of the State Council (SASAC) issued the “Working Rules of the Board of Directors of Central State-Owned Enterprises (for Trial Implementation)” (hereinafter referred to as the “Rules”, 中央企业董事会工作规则(试行)) to stipulate provisions or requirements for further strengthening the development of the board of directors of central state-owned enterprises.

The Rules is applicable to wholly state-owned central enterprises in which the State-owned Assets Supervision and Administration Commission of the SASAC performs its duties as a contributor, and it also serves as guidelines for other central state-owned enterprises with diversified shareholding, enterprises affiliated to central state-owned enterprises, and local state-owned enterprises.

The Rules clarifies that the board of directors is the main decision-making body of a company, and the board of directors shall, in accordance with the statutory procedures and the articles of association, make decisions on important business management matters, such as business plans, significant investment and financing matters, annual financial budget, and settlement, important reform schemes, etc.

The Rules, by drawing lessons from the OECD Guidelines on Corporate Governance of State-Owned Enterprises, emphasizes the supervising role of the board of directors. The Rules makes it clear that the board of directors shall strengthen its management and supervision of the management level, and imposes requirements on directors in protecting the interests of state-owned capitals, implementing the intent of capital contributors, and urging the board of directors to operate in a regularized and effective manner when making decisions. The Rules further standardizes and clarifies the provisions such as the board of directors’ reporting important situations to the capital contributors and the directors’ reporting abnormal situations to the capital contributors.

 

 

Cover Photo by Peter Zhou (https://unsplash.com/@zhoup) on Unsplash

Contributors: CJO Staff Contributors Team

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