If listed companies fail to meet corporate governance standards by November 30, the China Securities Regulatory Commission will refuse their proposals for share incentive schemes or new fund raising, it said yesterday.
The watchdog announced the tougher rules after finding common corporate governance problems among listed companies. These included lack of independence due to excessive power by controlling shareholders and failing to clarify responsibilities of independent board members.
The regulator said it will pay close attention to company proposals under review if listed companies fail to meet the standards.
It requires boards to be able to freeze shares held by big shareholders in case of emergencies. They should also fortify the process of collecting, safeguarding and disclosing sensitive information to prevent insider trading and market manipulation.
The statement said the regulator had promoted the latest standard of corporate governance among listed companies last year and asked them to plan improvements. China is strengthening supervision to battle false information disclosure, insider trading and fund misappropriation.
Listed companies must report their progress before July 20 and finish the process before November 30.
(Shanghai Daily June 27, 2008)
