China Securities Regulator Initiates Comprehensive Governance Campaign for Listed Companies

CSRC Unveils New Governance Drive

China's top securities regulator, the China Securities Regulatory Commission (CSRC), has announced a new round of special actions designed to bolster the governance of listed companies and further deepen reforms within the capital market. This significant initiative was revealed during a meeting chaired by Wu Qing, chairman of the CSRC.

The campaign's primary objectives include fostering the development of high-quality listed firms and guiding strong performers to increase dividend payouts and share buybacks. This latest push follows a previous two-year governance campaign, launched in December 2020, which focused on company self-inspection, on-site reviews, and rectification efforts to elevate governance standards across listed entities.

Key Regulatory Enhancements and Reforms

Beyond the immediate governance actions, the CSRC is implementing a broader set of reforms to enhance market stability and integrity. These include:

• Fully implementing long-cycle performance assessments for institutional investors.
• Improving long-term market stabilization mechanisms.
• Deepening reforms within the ChiNext market.
• Expediting the launch of pilot programs for commercial real estate investment trusts.
• Studying the introduction of new futures products.

The commission also plans to accelerate efforts to cultivate world-class investment banks and institutions, enhance the efficiency of the overseas-listing filing mechanism, and introduce new regulations for listed company supervision.

Draft Regulations and Guidelines for Public Comment

In a move towards more comprehensive oversight, the CSRC has published a 74-article draft regulation titled 'Regulations on the Supervision and Administration of Listed Companies'. This draft, open for public comment until January 5, 2026, aims to tighten corporate governance, improve information disclosure, and enhance investor protection. Key provisions within this draft include:

• Improving governance requirements for listed companies.
• Regulating the governance structure and the behaviors of key stakeholders such as controlling shareholders, actual controllers, directors, and senior executives.
• Further strengthening the regulation of information disclosure, with a particular focus on addressing financial fraud.
• Standardizing merger and acquisition behaviors.

Additionally, the CSRC has revised the 'Governance Guidelines for Listed Companies', set to take effect on January 1, 2026. These revisions aim to improve the supervision system for directors and senior management, enhance incentive and restraint mechanisms, and regulate the conduct of controlling shareholders and actual controllers. The updated guidelines also align with the Company Law that came into effect on July 1, 2024, notably abolishing supervisory boards in listed companies and lowering the threshold for shareholder proposals.

Broader Market Stabilization Efforts

The governance campaign is part of a wider strategy by the CSRC to ensure a healthy and stable capital market. Recent measures have included strengthening supervision of information disclosure, cracking down on financial fraud, and combating 'shell company' speculation. The regulator has also taken steps to boost mergers and acquisitions (M&A) and restructuring deals, and to stabilize capital markets by suspending securities relending and raising margin requirements for short sellers. Furthermore, reforms are being implemented for the STAR market, focusing on improving pricing for stock listings and facilitating M&A for high-tech firms.