"As regulatory authorities have decided to improve corporate governance in 2009, the Shanghai Stock Exchange (SSE) will establish the Committee for Promotion of Listed Companies' Governance with external experts this year, work out the goal of improving listed companies' governance in the following three years and formulate a series of plans of actions," said President Zhang Yujun of the Shanghai Stock Exchange (SSE) at the recent "Seminar on Corporate Governance and Information Disclosure of SSE-listed Central State-owned Enterprises and Banks".
According to Zhang, emphasis will be laid on four areas to rectify corporate governance, namely, illegal occupation of listed companies' capital by major shareholders, illegal guarantees by listed companies, horizontal competitions and non-fair connected transactions, and fulfillment of promises in equity division reform. The SSE will further improve methods of on-site inspection to conduct pertinent on-site inspections towards key companies based on the problems found in annual reports' auditing, media reports and complaints via letters and visits.
Zhang said that corporate governance will be a highlight of the SSE's market construction this year. Apart from establishing the Committee for Promotion of Listed Companies' Governance, the bourse will form a special institution to drive the training for listed companies' directors, supervisors and senior management and also that of corporate governance. Moreover, the bourse will guide the listed companies to comply with the best practice of corporate governance by conducting a series of summary and appraisal activities, issuing the best practice case collection, encouraging the third party rating and holding appraisal activities for best corporate governance.
What's more, the SSE will further promote the listed companies to facilitate the external supervision by improving information disclosure quality and enhancing the corporate governance transparency. With the importance and usefulness of information disclosure stressed, listed companies are required to strengthen fair disclosure and encouraged to disclose voluntarily. Also, the requirements of disclosure in XBRL standards will be further perfected in preparation for the pilot use of XBRL in the periodical reports of 2009.
The SSE will also advance improvement of relevant systems in listed companies' internal control by requiring companies to fully implement the internal control standard and to disclose the directorates' internal control appraisal reports together with the auditors' verification and evaluation opinions of companies' internal control. In the meantime, the bourse will also push the listed companies to establish internal control committees.
Besides, the formulation of a series of regulations on corporate governance is under way. Zhang revealed that the "Rules on Supervision of Listed Companies" had been submitted to the Legislative Affairs Office of the State Council and would be promulgated within this year.
Meanwhile, the SSE will further improve the systems and construct a more flexible corporate governance system platform by promoting the promulgation of a series of regulations including the "Rules for Listed Companies Governance".
