关于进一步促进境外上市公司规范运作和深化改革的意见

(Issued by the State Economic and Trade Commission and the China Securities Regulatory Commission on 29 March 1999.)
颁布日期：19990329 　实施日期：19990329 　颁布单位：国家经济贸易委员会、 中国证券监督管理委员会

　　A "company listed outside China" ("Company") is a company which raises capital outside the country and is one of the types of organizational structure under the modern enterprise system. This structure imposes comparatively high requirements on such areas as corporate¹ management structure and information disclosure. At present the majority of Companies have shown progress in innovating² their systems of organization and transforming their operating mechanisms⁴; however, there are also some Companies which have not yet fully⁵ completed the transformation⁶ of their operating mechanisms, and which demonstrate problems in such areas as operational standardization⁷ and internal management. The following opinions concerning operational standardization and intensification⁸ of corporate reform are put forward in order to further promote Companies' strict compliance⁹ with the relevant domestic and foreign laws and regulations, their conscientious¹⁰ performance of their continuing obligations toward investors¹¹ and their establishment of a good corporate image on domestic and foreign capital markets:

　　1. The operational organizations of Companies must be separated from those of their controlling entities¹²

　　Companies must rationalize their corporate management systems in keeping with the requirements of the modern enterprise system.

　　Companies and their controlling entities (hereafter "controlling entities" refers to companies, enterprises and institutions with legal person status that have a controlling interest in a Company) must keep independent accounts and independently bear liabilities and risks. A controlling entity¹³ shall principally exercise its shareholder¹⁴ rights in a Company through the shareholders¹⁵' meeting in accordance with legal procedures. The organizations within a Company, particularly the board of directors, management, the financial and marketing¹⁷ organizations, must be independent from those of the controlling entity. All those which are not yet independent must be separated before the end of 1999. There shall be no superior/subordinate relationship between the internal organizations of the controlling entity and the corresponding departments of the Company, and the former may not issue directives to or otherwise interfere¹⁸ with the independence of the Company's organizations.

　　When the controlling entity appoints a shareholder representative to the Company, such person shall join the board of directors in a lawful¹⁹ manner. No more than two senior management personnel from the controlling entity (i.e. the chairman of the board, vice-chairmen of the board and executive directors) may concurrently²¹ hold the position of chairman of the board, vice-chairman of the board or executive director in the Company and they must clearly separate the duties of their respective offices, bear the legal liabilities and exercise the legal rights of their concurrent²⁰ positions, and ensure that they have sufficient time and the necessary knowledge and abilities to handle the work of the Company. No member of the management personnel of the controlling entity may concurrently hold the position of general manager, assistant general manager, chief financial officer, chief marketing officer or secretary of the board of directors of the Company.

　　2. Further intensify²² the restructuring of controlling entities and Companies

　　The functions of a State-owned controlling entity whose principal business and assets have been folded into a Company shall progressively be allocated²³ to, or merged²⁴ into, other State-owned legal person entities. If the controlling entity has assets and business aside from the business of the Company, it shall reduce its affiliated²⁵ transactions with the Company and avoid competing with it in the same industry.

　　Controlling entities shall progressively shed their social welfare functions and non-operational assets by shifting the same to society through such methods as auctions²⁶, mergers²⁷ and acquisitions, transfer to local governments and integration²⁸ into the local social welfare system. For those which are at present still difficult to shed, strict management methods must be formulated³⁰ to ensure that they are separate from the Company financially and personnel-wise.

　　When a Company sheds its social welfare functions and non-operational assets, the agreement executed between the controlling entity and the Company at the time of listing and restructuring shall be strictly³¹ performed. For those which have not been completely shed, the shedding process must be continued and completed within a limited period of time. A newly listed Company shall formulate²⁹ a concrete plan to shed its social welfare functions and non-operational assets and specify³² the methods and responsibilities for resolving the remaining issues prior to listing; otherwise, it shall not be permitted to list. Governments at all levels and the relevant authorities shall adopt proactive measures to support the restructuring of Companies and controlling entities.

　　3. Specify Companies' decision-making process and strengthen director responsibility

　　A Company must make its decision-making procedure explicit³³ in its articles of association and it may not permit decisions which should be made by the shareholders' general meeting to be made in any other way. A Company also may not permit decisions which should be made by the board of directors to be made in any other way (such as by a joint³⁴ meeting). For any important matter subject to decision by the board of directors, all of the executive directors and external directors (hereafter "external directors" refers to directors who do not hold a position in the Company) must be given advance notice by the statutory time and provided with sufficient information, and the meeting must be conducted in strict compliance with the prescribed procedures. The directors may demand that supplementary³⁵ materials be provided. If one-quarter or more of the directors or two or more of the external directors believe that there is insufficient³⁶ information or that the arguments are inconclusive, they may jointly³⁷ propose that the board meeting be postponed³⁸ or that some of the matters to be discussed at the board meeting be discussed at a later time. In such circumstances the board of directors shall accept the proposal.

　　The directors of a Company have a fiduciary³⁹ obligation and a duty of due diligence. A director shall adopt a conscientious and responsible attitude when attending board meetings and express unequivocal opinions on the matters being discussed. If a director is unable to attend he may not transfer his voting rights, but he may empower, in writing, another director to attend the meeting as his proxy⁴⁰; however, in such circumstances the director shall independently bear legal liability. Even if each director has in whatever manner expressed an opinion, any written resolution of the board of directors which was not reached in accordance with legal procedures and signed by the directors shall not have the legal effect of a board resolution. Directors who have voted for a board resolution which violates a law, administrative⁴¹ regulation and/or the Company's articles of association shall be directly liable. A director who can prove that he expressed a dissenting⁴² opinion during the vote and whose negative vote is recorded in the minutes of the board meeting may be exempted⁴³ from liability. A director who abstained⁴⁴ or who was absent and failed to appoint a proxy may not be exempted from liability. A director who explicitly⁴⁵ raised objections in the discussion but did not explicitly vote against such a resolution may also not be exempted from liability. The board of directors shall keep complete minutes of the matters discussed and the resolutions made at board meetings. The secretary of the board of directors shall conscientiously⁴⁶ organize the minutes and set out in an orderly manner the matters discussed at the board meeting. The secretary of the board of directors shall sign the resolutions and be liable for the accuracy of the minutes.

　　4. Strengthen the strategic policy making function of the board of directors, and make active and proper use of outside consultancy organizations

　　The board of directors shall concentrate its energies to draw up and study the Company's long term development strategy and in so doing may, on the basis of need, establish strategic policy making, auditing⁴⁷ and other such professional committees. Before making decisions on market development, mergers and acquisitions or investment in a new field, a Company shall engage an outside consultancy organization to provide a professional opinion to be used as an important basis for the board of directors' decision, if the investment or the merger/acquisition assets amount to 10% or more of its total assets.

　　5. Maintain the stability of Companies' senior management and raise the quality of Companies' senior management

　　The election, appointment or hiring of the senior management personnel (hereafter "senior management personnel" refers to directors, supervisors⁴⁸, managers, assistant managers, the chief financial officer and the secretary of the board of directors) of a Company shall be strictly conducted in accordance with the relevant provisions of the PRC, Company Law ("the Company Law") and the Articles of Association of Companies Seeking a Listing Outside the PRC Prerequisite⁴⁹ Clauses ("Prerequisite Clauses"). In the absence of any special reasons, the relevant senior management personnel may not be arbitrarily changed during the term of office for their position as specified⁵⁰ in the Company's articles of association. If there is a change, the statutory formalities and procedures must be carried out, and the change must be disclosed publicly and reported to the China Securities Regulatory Commission for the record. In Companies performing especially well, replacement⁵¹ of the chairman of the board and the general manager shall be comparatively rare.

　　The board of directors and the management of a Company shall have a balanced knowledge structure. Posts in such organizations shall be held by persons specialized⁵² in such areas as development strategy, finance, marketing, technological⁵³ development and law. The chairman of the board of directors, the manager, the chief financial officer and the secretary of the board of directors shall attend China Securities Regulatory Commission approved training courses on knowledge about foreign listings and pass professional qualification examinations. Companies shall select and engage the best financial, market development, technology development and other such senior management personnel from skilled personnel on both the domestic and foreign labour markets.

　　6. Progressively establish sound external director and independent director systems

　　Companies shall increase the ratio of external directors. When the board of directors is changed at the end of its term, the external directors shall comprise one half or more of the board and there shall be two or more independent directors (hereafter "independent directors" refers to directors who are independent from the shareholders of the Company and do not hold a position within the Company). An external director shall have sufficient time and the necessary knowledge and ability to perform the responsibilities of his office. When an external director is performing the responsibilities of his office, the Company must provide him with the necessary information and documentation. The opinions expressed by an independent director shall be clearly recorded in the board's resolutions. The Company's transactions with its affiliates⁵⁴ must be endorsed⁵⁵ by an independent director before they can become effective. Two or more independent directors may propose the convening⁵⁶ of an interim⁵⁷ shareholders' general meeting. Independent directors may directly report circumstances to the shareholders' general meeting, the China Securities Regulatory Commission and other relevant authorities.

　　7. Strengthen Companies' supervisory boards

　　A Company must unceasingly strengthen the functions of its supervisory board, specify its responsibilities and powers, formulate its specific work rules and procedural rules, and forestall⁵⁸ it becoming a mere⁵⁹ formality. The primary responsibility of a Company's supervisory board is investigating the Company's finances. It has the right to become acquainted with and investigate the business circumstances of the Company, it may demand that the secretary of the board of directors and the finance department provide it with relevant materials in accordance with prescribed procedures, and it has a corresponding obligation to maintain confidentiality⁶⁰. The supervisory board may make proposals concerning the accounting⁶¹ firm to be hired by the Company and, when necessary, in the Company's name appoint another accounting firm to independently investigate the Company's finances. The supervisory board may directly report circumstances to the China Securities Regulatory Commission and other relevant authorities. The relevant State authorities may commission the supervisory board of a Company to carry out an investigation⁶² of a specific matter. Companies shall increase the ratio of external supervisors (hereafter "external supervisors" refers to supervisors who do not hold a position in the Company). If a Company's supervisory board is changed at the end of its term, the external supervisors shall comprise one half or more of the supervisory board and it shall have two or more independent supervisors (hereafter "independent supervisors" refers to supervisors who are independent from the Company's shareholders and who do not hold a position in the Company). A Company's external supervisors shall independently report to the shareholders' general meeting on the senior management personnel's performance in respect of their fiduciary obligation and duty of due diligence.

　　8. Give full play to the functions of the secretary of the board of directors

　　The secretary of a Company's board of directors shall be appointed by the board of directors and, upon authorization⁶³ by the board of directors, be in charge of coordinating⁶⁴ and organizing information disclosure by the Company and liaising with investors, securities regulatory authorities and the media. The board of directors and the management of a Company shall pay attention to increasing the transparency of the Company, actively⁶⁵ support the secretary of the board of directors in the performance of his official duties and ensure that he has the necessary understanding of the Company's organization chart and key personnel.

　　9. Explore methods to motivate the senior management personnel of Companies

　　In concert with the special traits of its business operations, a Company may link the material benefits accruing⁶⁶ to senior management personnel with the performance of the Company. In line with the principles of disclosing earnings⁶⁷ and increasing transparency, each Company may design its own unique distribution and incentive⁶⁸ methods. With the consent of the shareholders' general meeting, the Company may adopt an appropriate method to reward senior management personnel and extraordinary contributions by personnel whose positions involve technical innovation, great business risk and major challenges and whose achievements are easily assessable.

　　10. Intensify the internal reform of Companies

　　Companies shall prevent and change the tendency to place importance on raising funds and shall increase the emphasis on restructuring. They shall organize their production and business activities, intensify internal reforms, restructure their operating mechanism³ and establish scientific and efficient management systems in response to the needs imposed by market competition.

　　Companies may autonomously⁶⁹ decide on the establishment of their internal organizations and the requirements, method, and time for recruiting personnel and the numbers to be hired. Companies may implement⁷⁰ economically motivated employee cutbacks and terminate the labour contracts with their staff and workers in accordance with laws and regulations and their own articles of association. They may dismiss and fire staff and workers.

　　Companies shall abolish the use of the terms "cadre" and "worker" and eliminate the status demarcation line and the occupational demarcation line drawn⁷¹ between "cadre" and "worker", and they may not indiscriminately adopt the administrative ranks used by governmental authorities. Management personnel shall compete for their posts and be removed from office if a more competent person becomes available for the post.

　　Companies shall autonomously decide upon their aggregate⁷² annual payroll⁷³ and the method for allocating⁷⁴ it internally.

　　Companies must implement housing system reform in accordance with the relevant State regulations and cease the allocation of housing to staff and workers as a benefit. Companies must participate in the reform of the social insurance system and carry out the procedures for old age, unemployment, medical and other such insurance for their staff and workers in accordance with the relevant State regulations.

　　11. Separate government and enterprise, and standardize⁷⁵ the capital contribution relationship between shareholders and Companies

　　In cutting the administrative affiliation⁷⁶ between Companies and government departments, Companies shall thoroughly⁷⁷ separate such facets⁷⁸ as their assets, finances and personnel management from those of the government departments to which they were subordinate. Government departments may not interfere in the production and business management of Companies and may not collect any type of administrative fee or supervisory fee from Companies.

　　Entities which exercise State-share shareholder rights in a Company or the shareholder representatives appointed by organizations which are holders¹⁶ of a Company's legal person State-shares shall participate in shareholders' general meetings in accordance with statutory procedure and exercise their rights in accordance with the law. No shareholding⁷⁹ organizations or representatives appointed thereby⁸⁰ may bypass the shareholders' general meeting to interfere in the production and business management of a Company or appoint or dismiss senior management personnel of the Company, nor may they perform approval procedures for personnel election resolutions of the Company's shareholders' general meeting or personnel appointment resolutions of the board of directors.