(Pix © Larry Catá Backer 2017)
I have posted a draft of my essay, "The Human Rights Obligations of State Owned Enterprises (SOEs): Emerging Conceptual Structures and Principles in National and International Law and Policy." Though the essay focused on the challenges of applying emerging CSR and human rights related responsibilities on SOEs, it also noted that one of the great gaps in the context of emerging thinking about SOEs was the lack of much effort to embed Chinese SOEs into the global discourse.
Chinese authorities are not waiting on the West to recognize the importance (and eventually the global influence) of its SOE model. On 30 May 2017 the Chinese State Council published its 国务院办公厅关于进一步完善 国有企业法人治理结构的指导意见 (Guiding Opinions on Corporate Governance Structure of State - Owned Enterprises State Council issued [2017] No. 36). It is worth considering the extent to which the Chinese approach is compatible with the Western project embedded within the OECD's work. Chinese authorities continue to work through issues of good corporate
governance within the logic of the Chinese political and economic system
on their own terms. That is great for China, but it exacerbates the
possibilities that this forward motion will widen gaps in
approaches between Western and Chinese approaches to SOEs and SOE
management. The most notable area where the gap is likely to have effects relates to the embedding of the Communist Party within the structures and management of the SOE (¶ 5 below).
These provisions are a logical application of the Chinese political principles set out in the Communist Party Basic Line. But it has no analogue in the West and might, and in some instances, may conflict with core Western corporate governance with respect to the powers of shareholders and the fiduciary duty of board members. And yet the central issue of the role of vanguard parties within the governance structures of enterprises has never been adequately understood--or theorized. These gaps can have profound effects especially (1) where Chinese SOEs seek to engage in joint ventures with Western enterprises, (2) when Chinese SOEs take substantial equity positions in Western enterprises, and (3) when Chinese SOEs begin to operate in substantial respect outside of China (and in their own right. Much more work is needed.
These provisions are a logical application of the Chinese political principles set out in the Communist Party Basic Line. But it has no analogue in the West and might, and in some instances, may conflict with core Western corporate governance with respect to the powers of shareholders and the fiduciary duty of board members. And yet the central issue of the role of vanguard parties within the governance structures of enterprises has never been adequately understood--or theorized. These gaps can have profound effects especially (1) where Chinese SOEs seek to engage in joint ventures with Western enterprises, (2) when Chinese SOEs take substantial equity positions in Western enterprises, and (3) when Chinese SOEs begin to operate in substantial respect outside of China (and in their own right. Much more work is needed.
The Chinese SOE governance project ought not to be understood in isolation., It is part of a coordinated effort to modernize--perhaps in a way that leaps over the conceptual constraints of Western enterprises--corporate governance to better serve the political and economic projects of state and its vanguard party in attaining national objectives. The thrust and character of of those objectives and the larger project were made clearer on 22 June 2017 when
The general office of the State Council released a guideline on Wednesday establishing 92 new demonstration bases nationwide to promote entrepreneurship and business startups. These will include 21 famous enterprises such as internet giant Tencent Holdings Ltd. The bases encompass 45 districts, including Beijing's Shunyi district, and 26 universities and research institutes, such as Peking University. (State Council designates 92 bases for entrepreneurship and business startups)
各省、自治区、直辖市人民政府，国务院各部委、各直属机构：完 善国有企业法人治理结构是全面推进依法治企、推进国家治理体系和治理能力现代化的内在要求，是新一轮国有企业改革的重要任务。当前，多数国有企业已初步建 立现代企业制度，但从实践情况看，现代企业制度仍不完善，部分企业尚未形成有效的法人治理结构，权责不清、约束不够、缺乏制衡等问题较为突出，一些董事会 形同虚设，未能发挥应有作用。根据《中共中央 国务院关于深化国有企业改革的指导意见》等文件精神，为改进国有企业法人治理结构，完善国有企业现代企业制度，经国务院同意，现提出以下意见：一、总体要求（一）指导思想。全 面贯彻党的十八大和十八届三中、四中、五中、六中全会精神，深入贯彻习近平总书记系列重要讲话精神和治国理政新理念新思想新战略，认真落实党中央、国务院 决策部署，统筹推进“五位一体”总体布局和协调推进“四个全面”战略布局，牢固树立和贯彻落实创新、协调、绿色、开放、共享的发展理念，从国有企业实际情 况出发，以建立健全产权清晰、权责明确、政企分开、管理科学的现代企业制度为方向，积极适应国有企业改革的新形势新要求，坚持党的领导、加强党的建设，完 善体制机制，依法规范权责，根据功能分类，把握重点，进一步健全各司其职、各负其责、协调运转、有效制衡的国有企业法人治理结构。（二）基本原则。1.坚持深化改革。尊重企业市场主体地位，遵循市场经济规律和企业发展规律，以规范决策机制和完善制衡机制为重点，坚持激励机制与约束机制相结合，体现效率原则与公平原则，充分调动企业家积极性，提升企业的市场化、现代化经营水平。2.坚持党的领导。落 实全面从严治党战略部署，把加强党的领导和完善公司治理统一起来，明确国有企业党组织在法人治理结构中的法定地位，发挥国有企业党组织的领导核心和政治核 心作用，保证党组织把方向、管大局、保落实。坚持党管干部原则与董事会依法选择经营管理者、经营管理者依法行使用人权相结合，积极探索有效实现形式，完善 反腐倡廉制度体系。3.坚持依法治企。依据《中华人民共和国公司法》、《中华人民共和国企业国有资产法》等法律法规，以公司章程为行为准则，规范权责定位和行权方式；法无授权，任何政府部门和机构不得干预企业正常生产经营活动，实现深化改革与依法治企的有机统一。4.坚持权责对等。坚持权利义务责任相统一，规范权力运行、强化权利责任对等，改革国有资本授权经营体制，深化权力运行和监督机制改革，构建符合国情的监管体系，完善履职评价和责任追究机制，对失职、渎职行为严格追责，建立决策、执行和监督环节的终身责任追究制度。（三）主要目标。2017 年年底前，国有企业公司制改革基本完成。到2020年，党组织在国有企业法人治理结构中的法定地位更加牢固，充分发挥公司章程在企业治理中的基础作用，国 有独资、全资公司全面建立外部董事占多数的董事会，国有控股企业实行外部董事派出制度，完成外派监事会改革；充分发挥企业家作用，造就一大批政治坚定、善 于经营、充满活力的董事长和职业经理人，培育一支德才兼备、业务精通、勇于担当的董事、监事队伍；党风廉政建设主体责任和监督责任全面落实，企业民主监督 和管理明显改善；遵循市场经济规律和企业发展规律，使国有企业成为依法自主经营、自负盈亏、自担风险、自我约束、自我发展的市场主体。二、规范主体权责健 全以公司章程为核心的企业制度体系，充分发挥公司章程在企业治理中的基础作用，依照法律法规和公司章程，严格规范履行出资人职责的机构（以下简称出资人机 构）、股东会（包括股东大会，下同）、董事会、经理层、监事会、党组织和职工代表大会的权责，强化权利责任对等，保障有效履职，完善符合市场经济规律和我 国国情的国有企业法人治理结构，进一步提升国有企业运行效率。（一）理顺出资人职责，转变监管方式。1. 股东会是公司的权力机构。股东会主要依据法律法规和公司章程，通过委派或更换董事、监事（不含职工代表），审核批准董事会、监事会年度工作报告，批准公司 财务预决算、利润分配方案等方式，对董事会、监事会以及董事、监事的履职情况进行评价和监督。出资人机构根据本级人民政府授权对国家出资企业依法享有股东 权利。2. 国有独资公司不设股东会，由出资人机构依法行使股东会职权。以管资本为主改革国有资本授权经营体制，对直接出资的国有独资公司，出资人机构重点管好国有资 本布局、规范资本运作、强化资本约束、提高资本回报、维护资本安全。对国有全资公司、国有控股企业，出资人机构主要依据股权份额通过参加股东会议、审核需 由股东决定的事项、与其他股东协商作出决议等方式履行职责，除法律法规或公司章程另有规定外，不得干预企业自主经营活动。3. 出资人机构依据法律法规和公司章程规定行使股东权利、履行股东义务，有关监管内容应依法纳入公司章程。按照以管资本为主的要求，出资人机构要转变工作职 能、改进工作方式，加强公司章程管理，清理有关规章、规范性文件，研究提出出资人机构审批事项清单，建立对董事会重大决策的合规性审查机制，制定监事会建 设、责任追究等具体措施，适时制定国有资本优先股和国家特殊管理股管理办法。（二）加强董事会建设，落实董事会职权。1. 董事会是公司的决策机构，要对股东会负责，执行股东会决定，依照法定程序和公司章程授权决定公司重大事项，接受股东会、监事会监督，认真履行决策把关、内 部管理、防范风险、深化改革等职责。国有独资公司要依法落实和维护董事会行使重大决策、选人用人、薪酬分配等权利，增强董事会的独立性和权威性，落实董事 会年度工作报告制度；董事会应与党组织充分沟通，有序开展国有独资公司董事会选聘经理层试点，加强对经理层的管理和监督。2. 优化董事会组成结构。国有独资、全资公司的董事长、总经理原则上分设，应均为内部执行董事，定期向董事会报告工作。国有独资公司的董事长作为企业法定代表 人，对企业改革发展负首要责任，要及时向董事会和国有股东报告重大经营问题和经营风险。国有独资公司的董事对出资人机构负责，接受出资人机构指导，其中外 部董事人选由出资人机构商有关部门提名，并按照法定程序任命。国有全资公司、国有控股企业的董事由相关股东依据股权份额推荐派出，由股东会选举或更换，国 有股东派出的董事要积极维护国有资本权益；国有全资公司的外部董事人选由控股股东商其他股东推荐，由股东会选举或更换；国有控股企业应有一定比例的外部董 事，由股东会选举或更换。3. 规范董事会议事规则。董事会要严格实行集体审议、独立表决、个人负责的决策制度，平等充分发表意见，一人一票表决，建立规范透明的重大事项信息公开和对外 披露制度，保障董事会会议记录和提案资料的完整性，建立董事会决议跟踪落实以及后评估制度，做好与其他治理主体的联系沟通。董事会应当设立提名委员会、薪 酬与考核委员会、审计委员会等专门委员会，为董事会决策提供咨询，其中薪酬与考核委员会、审计委员会应由外部董事组成。改进董事会和董事评价办法，完善年 度和任期考核制度，逐步形成符合企业特点的考核评价体系及激励机制。4. 加强董事队伍建设。开展董事任前和任期培训，做好董事派出和任期管理工作。建立完善外部董事选聘和管理制度，严格资格认定和考试考察程序，拓宽外部董事来 源渠道，扩大专职外部董事队伍，选聘一批现职国有企业负责人转任专职外部董事，定期报告外部董事履职情况。国有独资公司要健全外部董事召集人制度，召集人 由外部董事定期推选产生。外部董事要与出资人机构加强沟通。（三）维护经营自主权，激发经理层活力。1.经理层是公司的执行机构，依法由董事会聘任或解聘，接受董事会管理和监事会监督。总经理对董事会负责，依法行使管理生产经营、组织实施董事会决议等职权，向董事会报告工作，董事会闭会期间向董事长报告工作。2. 建立规范的经理层授权管理制度，对经理层成员实行与选任方式相匹配、与企业功能性质相适应、与经营业绩相挂钩的差异化薪酬分配制度，国有独资公司经理层逐 步实行任期制和契约化管理。根据企业产权结构、市场化程度等不同情况，有序推进职业经理人制度建设，逐步扩大职业经理人队伍，有序实行市场化薪酬，探索完 善中长期激励机制，研究出台相关指导意见。国有独资公司要积极探索推行职业经理人制度，实行内部培养和外部引进相结合，畅通企业经理层成员与职业经理人的 身份转换通道。开展出资人机构委派国有独资公司总会计师试点。（四）发挥监督作用，完善问责机制。1. 监事会是公司的监督机构，依照有关法律法规和公司章程设立，对董事会、经理层成员的职务行为进行监督。要提高专职监事比例，增强监事会的独立性和权威性。 对国有资产监管机构所出资企业依法实行外派监事会制度。外派监事会由政府派出，负责检查企业财务，监督企业重大决策和关键环节以及董事会、经理层履职情 况，不参与、不干预企业经营管理活动。2.健全以职工代表大会为基本形式的企业民主管理制度，支持和保证职工代表大会依法行使职权，加强职工民主管理与监督，维护职工合法权益。国有独资、全资公司的董事会、监事会中须有职工董事和职工监事。建立国有企业重大事项信息公开和对外披露制度。3. 强化责任意识，明确权责边界，建立与治理主体履职相适应的责任追究制度。董事、监事、经理层成员应当遵守法律法规和公司章程，对公司负有忠实义务和勤勉义 务；要将其信用记录纳入全国信用信息共享平台，违约失信的按规定在“信用中国”网站公开。董事应当出席董事会会议，对董事会决议承担责任；董事会决议违反 法律法规或公司章程、股东会决议，致使公司遭受严重损失的，应依法追究有关董事责任。经理层成员违反法律法规或公司章程，致使公司遭受损失的，应依法追究 有关经理层成员责任。执行董事和经理层成员未及时向董事会或国有股东报告重大经营问题和经营风险的，应依法追究相关人员责任。企业党组织成员履职过程中有 重大失误和失职、渎职行为的，应按照党组织有关规定严格追究责任。按照“三个区分开来”的要求，建立必要的改革容错纠错机制，激励企业领导人员干事创业。（五）坚持党的领导，发挥政治优势。1. 坚持党的领导、加强党的建设是国有企业的独特优势。要明确党组织在国有企业法人治理结构中的法定地位，将党建工作总体要求纳入国有企业章程，明确党组织在 企业决策、执行、监督各环节的权责和工作方式，使党组织成为企业法人治理结构的有机组成部分。要充分发挥党组织的领导核心和政治核心作用，领导企业思想政 治工作，支持董事会、监事会、经理层依法履行职责，保证党和国家方针政策的贯彻执行。2. 充分发挥纪检监察、巡视、审计等监督作用，国有企业董事、监事、经理层中的党员每年要定期向党组（党委）报告个人履职和廉洁自律情况。上级党组织对国有企 业纪检组组长（纪委书记）实行委派制度和定期轮岗制度，纪检组组长（纪委书记）要坚持原则、强化监督。纪检组组长（纪委书记）可列席董事会和董事会专门委 员会的会议。3. 积极探索党管干部原则与董事会选聘经营管理人员有机结合的途径和方法。坚持和完善双向进入、交叉任职的领导体制，符合条件的国有企业党组（党委）领导班子 成员可以通过法定程序进入董事会、监事会、经理层，董事会、监事会、经理层成员中符合条件的党员可以依照有关规定和程序进入党组（党委）；党组（党委）书 记、董事长一般由一人担任，推进中央企业党组（党委）专职副书记进入董事会。在董事会选聘经理层成员工作中，上级党组织及其组织部门、国有资产监管机构党 委应当发挥确定标准、规范程序、参与考察、推荐人选等作用。积极探索董事会通过差额方式选聘经理层成员。三、做好组织实施（一）及时总结经验，分层有序实施。在 国有企业建设规范董事会试点基础上，总结经验、完善制度，国务院国资委监管的中央企业要依法改制为国有独资公司或国有控股公司，全面建立规范的董事会。国 有资本投资、运营公司法人治理结构要“一企一策”地在公司章程中予以细化。其他中央企业和地方国有企业要根据自身实际，由出资人机构负责完善国有企业法人 治理结构。（二）精心规范运作，做好相互衔接。国有企业要按照完善法人治理结构的要求，全面推进依法治企，完善公司章程，明确内部组织机构的权利、义务、责任，实现各负其责、规范运作、相互衔接、有效制衡。国务院国资委要会同有关部门和单位抓紧制定国有企业公司章程审核和批准管理办法。金融、文化等国有企业的改革，中央另有规定的依其规定执行。国务院办公厅2017年4月24日（此件公开发布）
State Council General Office
Guiding Opinion on Further Improving the Governance Structure of State-Owned EnterprisesGuobanfa 〔2017〕 no. 36To all provinces, autonomous regions and municipalities directly controlled by the central government, all State Council ministries, and all directly controlled institutions:Perfecting the governance structure of state-owned enterprise is an intrinsic requirement of comprehensively advancing ruling enterprises in accordance to the law, promoting the modernization of the national governance system and governing ability. It is an important task of the new round of SOEs reform.At present, most state-owned enterprises have initially established a modern enterprise system, but judging from the situation in practice, the modern enterprise system is still imperfect. Some enterprises have not yet formed an effective corporate governance structure. The powers and responsibilities are not clear, constraints are not sufficient, the lack of checks and balances and other issues are prominent. Some board of directors exist in name only, and cannot bring their function into play.According to the spirit of the "Central Committee, State Council Guiding Opinion on Deepening the Reform of State-owned Enterprises", in order to improve the governance structure of state-owned enterprises, and perfect the modern enterprise system of SOEs, the following Opinion is issued with the agreement of the State Council:I. General Requirements(a) Guiding Ideology.Comprehensively implement the spirit of the Party's 18th Congress and its 3rd, 4th, 5th, 6th plenary sessions; thoroughly implement the spirit of the important speeches of the General Secretary Xi Jinping and the new strategic ideology of managign state affairs; earnestly implement the CPC Central Committee, and State Council's strategic deployment, to advance the overall plan and the coordination of the "Five-in-One" strategic deployment; firmly establish and implement the concept of innovative, coordinated, green, open, and shared development concept; depart from the reality of state-owned enterprises in order to establish as a direction a system of sound and clear property rights, clear responsibility, separation between government and enterprises, and a modern enterprise system. Actively adapt to the needs of the new situation of state-owned enterprises reform, uphold Party leadership, strengthen Party construction, improve the institutional mechanisms, regulate authority in accordance with the law, graspe the main points according to the classification of functions, and further improve the responsibilities, accountability, coordinated operation, effective checks and balances of state-owned enterprises corporate governance structure.(b) Basic Principles.1. Uphold deepening reform. Respect the market subject status of enterprises, follow the law of market economy and the law of enterprise development, focus on standardizing the decision-making mechanism and perfecting the mechanism of checks and balances, uphold the combination of incentive mechanisms and restraint mechanisms, embody the principles of efficiency and fairness, fully mobilize the enthusiasm of entrepreneurs, promoting the marketization of state-owned enterprises, and the modernization of their entrepreneurial level.2. Uphold Party leadership. Implement the strategic deployment of comprehensively strictly governing the Party. Bring together strengthening Party leadership and improving corporate governance, specify the statutory position of Part organizations in the corporate governance of State-owned enterprises, bring into play the core leadership and core political role of Party organizations in State-owned enterprises, guarantee that Party organizations maintain their direction, manage the general situation, and guarantee implementation. Uphold the principle of Party management of cadres, and the choice of managers by the Board of Directors in accordance with the law, combine the exercise of human authority and power by managers in accordance with the law, actively explore effective forms to improve the anti-corruption system.3. Uphold managing enterprises in accordance with the law.According to the "People's Republic of China Company Law", the "People's Republic of China Enterprise State-Owned Assets Law", companies articles of association are the code of conduct, the position of rights and responsibilities and the use of authority should be standardized. Without authorization, no government department or agency should interfere in the normal productive and management operations of enterprises, the rights and responsibilities and the way of the right; without authorization, no government departments or agencies shall interfere with the normal production and management activities of enterprises. Establish the organic unity of enterprise reform and corporate governance in accordance with the law.4. Uphold the equivalence of rights and responsibilities.Uphold the unity of right and duty, standardize the operation of power, strengthen the equivalence of rights and responsibilities, reform the system of authorized management of state-owned capital, deepen the reform of power operation and supervision mechanism, construct a supervision system which conforms to the national conditions, perfect duty evaluation and accountability mechanisms, strictly pursue the responsibility for dereliction of duty and malfeasance, and establish a system of lifelong accountability for decisions, [their] implementation, and [their] supervision.(c) Main Objectives.By the end of 2017, the reform of state-owned enterprise system will be basically completed.By 2020, the statutory position of Party organizations in the governance structure of state-owned enterprises will be firmer, the basic role of companies statutes in corporate governance will be brought into full play, all sole-investor state-owned enterprises and wholly funded enterprises will establish a board of directors where the majority is held by of external board members. State-owned holding enterprises will carry out the external Board of Directors system and will complete the reform of the external Board of Supervisors. They will give full play to the role of entrepreneurs, create a large number of chairmen and managers who are politically firm, good at management, full of vigor. They will cultivate directors and supervisors uniting ethics to integrity, proficient in business, courageous and daring. The construction of Party's clean governance responsibility for subjects, and supervision responsibility will fully be implemented. Enterprises democratic supervision and management will manifestly improve. Following the law of market economy and the law of enterprise development, State-owned enterprises will become a self-managing, self-responsible market subject responsible for their of losses and for their risk, and which will discipline themselves and develop autonomously.II. Norms and responsibilities of main bodiesImprove companies statutes as the core of the enterprise system, give full play to companies statutes as the basis of corporate governance. In accordance with laws and regulations and the company's statutes, strictly regulate the performance of responsibilities by the investing institutions (hereinafter referred to as the investor institutions), the rights and responsibilities of the shareholders ' meeting (including the general meeting of shareholders, same for what follows), the Board of directors, the management, the Committee of Supervisors, Party organizations and the Workers ' Congress. Strengthen the equivalence of rights and responsibilities, guarantee the effective performance of duties, and perfect the governance structure of State-owned enterprises in line with the law of the market economy and our national circumstances, and further improve the effective operation of state-owned enterprises.(a) Rationalize the responsibility of investors and change the mode of supervision.1. The Shareholders' assembly is an institution of the enterprise's authority.The Shareholders' assembly will appoint and replace directors, supervisors (excluding the workers' representatives) in accordance with laws and regulations and the company' statute. It will examine and approve the Board of Directors and the Board of Supervisors annual work reports, approve the company's financial budgets, profit distribution plans. It will perform appraisals of and supervise performance of duties by the Board of Directors and the Board of Supervisors.The investing institution shall enjoy shareholders rights on State-invested enterprises according to legislation issued by the same level people's government.2. Sole-investor State-owned enterprises do not have a shareholders assembly, and shareholders authority shall be exercised by the investing institution.Reform the authorized management system of State-owned capital on the basis of the management of capital. The investing institutions will regulate the distribution of state-owned capital, regulate the operation of capital, strengthen restraints on capital, raise returns on capital, and maintain capital security towards directly-invested State-owned enterprises.Investing institutions in State-owned enterprises, State-owned holding enterprises perform their duties by participating in shareholders meetings based on the total of their shares, by reviewing items to be approved by the shareholders assembly, by negotiation major resolutions with other shareholders, and in other ways. Except for laws, regulations and the company's statute, they shall not interfere with the enterprise's independent exercize of business activities.3. The investing institution enjoys shareholder's rights and fulfils shareholders' obligations in accordance with the laws and regulations and the company's statute. Relevant regulatory content shall be incorporated in the company's statute in accordance with the law. According to the requirements of managing capital as a priority, the investing institution will change its job function and improve its working methods. It will strengthen the management of the companies' statute, it will clean up relevant regulations and normative documents, it study and put forward the list of the items to be approved by the investing institution, it will establish a compliance review mechanism for major decisions of the Board of Directors, it will formulate concrete measures, on constructing the Board of Supervisors, on concrete measures to pursue responsibilities, in due course it will establish measures on preferred stocks and on State special management stocks.(b) Strengthen the Board of Trustees and implement the functions of the Board.1. The Board of Directors is the decision-making body of the enterprise, it is responsible towards the shareholders assembly, it carries out its decisions, and decides on the enterprise important matters in accordance with statutory procedures and the authority of company statute. It receives the supervision of the shareholders meeting and the Board of Supervisors, it earnestly carries out the duties of decision-making, internal management, risk prevention and deepening of reform. Sole-investor state-owned enterprises shall implement and maintain the major decisions by the Board of Directors in accordance with the law, the election of personnel, the distribution of remuneration and other rights. They shall enhance the independence and authority of the Board of Directors, implement the system of annual reporting by the Board of Directors. The Board of Directors shall fully communicate with the Party organ, and conduct orderly pilot trials of management election by the Board of Directors of wholly State-owned companies, and strengthen the management and supervision of the management.2. Optimize the board structure.The chairman and the general manager of wholly state-owned and wholly-owned enterprises shall in principle be divided into internal executive directors and report regularly to the board of directors.The Chairman of wholly state-owned enterprises, as the legal representative of the enterprise, has the primary responsibility for the reform and development of the enterprise, and should make timely reports to the Board of directors and shareholders of major managerial problems and risks.The directors of wholly state-owned company are responsible for the investing institution and are guided by the investing institution. Among them, the election of external directors shall take place by the investing institution after nomination by the relevant organ, and their appointment shall take place in accordance with statutory procedures.The directors of wholly state-owned enterprises and state-holding enterprises shall be dispatched under recommendation by relevant shareholders according to their shares. They shall be elected or demoted by the shareholders' assembly. Directors dispatched by state shareholders shall actively safeguard the rights and interests of the state-owned capital. External directors of State-owned wholly-owned companies are recommended by shareholders other than the controlling shareholder. They shall be elected or replaced by the shareholders' assembly. State holding enterprises shall have a definie proportion of external directors, which shall be elected or replaced by the shareholders' assembly.3. Regulate the board's rules of procedure.The Board shall strictly implement collective deliberation, independent vote, the individual responsible decision-making system, the equal and full expression of views, one-person-one-vote, to establish a clear and transparent information disclosure system of major deliberations and a disclosure of information to the outside. It shall ensure the integrity of Board meeting's records and motions. It shall establish the Board of Directors to follow up on the implementation of resolutions and evaluation system, and it shall do a good job of liasing with other main governance bodies.The Board of Directors shall set up special committees such as the Nomination Committee, the Remuneration and Assessment Committee and the Audit Committee to advise the Board or Directors. Among these, the Remuneration and Evaluation Committee and the Board of Auditors shall be composed by external directors.Improve the evaluation methods of the Board of Directors and directors, improve the annual and quarterly assessment system, and gradually form and evaluation system and incentive mechanism in line with the characteristics of enterprises.4. Strengthen the construction of the board. Conduct the pre-appointment and continuing training of directors, do a good job in managing directors' appointment and tenure. Establish and improve the external directors selection and management system, strict procedures to determine their qualification and examination, broaden the source of external Directors, expand the contingent of full-time external directors, select a number of current directors of State-owned enterprises to be transferred to full-time external directors, regularly report on the situation of external directors.Sole-investor State-owned enterprises should perfect the system of convening independent external directors, and the convenor shall be periodically elected by the external directors. External directors should strengthen communication with the funding institution.(c) Maintain the autonomy of business and stimulate the vigor of management.1. The management level is the executive body of the enterprise, which is appointed or demoted by the Board of Directors in accordance with the law, and is subject to supervision by the Board of Directors and the Board of Supervision.The General Manager shall be responsible before the Board of Directors. He shall manage production and operations in accordance with the law, organize and implement decisions of the Board of Directors, report work to the Board of Directors, and report work to the Chairman when the Board of Director is not in session.2. Establish a standardized management system for the managment, implement a differentiated system of compensation which matches the mode of appointment, is suited to the functional nature of the enterprise, and is linked to the enterprise achievements. The management of state-owned sole-investor enterprises shall gradually implement the tenure and contract management.According to the different situations of enterprise property rights structure, degree of marketization and so on, orderly advance the construction of professional management system, gradually broaden the Professional management team, orderly implement a market-oriented salary, explore and perfect medium and long term incentive mechanisms, and conduct research on issuing relevant guiding opinions.State-owned enterprises should actively explore the implementation of the professional management system, implement a combination of internal training and external introduction, put into place channels for the smooth conversion of professional managers into companies managers.Carry out pilot projects on the dispatch of General Accountants in State-owned enterprises by the investor institution.(d) Bring into play the supervisory role and improve accountability mechanisms.1. The Board of Supervision is the enterprise's supervisory institution. In accordance with relevant laws and regulations and the company statute, it supervises the professional conduct of the Board of Directors, and of the managment.Improve the proportion of full-time supervisors, strengthen the independence and authority of the Board of Supervisors.Implement the system of the external Board of Supervisors on enterprises invested by State-owned Assets Supervision Institutions.The external Board of Supervisors is dispatched by the Government to check the financial affairs of the enterprise, supervise major and crucial decisions of the enterprise, the board of directors and managers. It does not participate in or interfere with business management activities.2. Improve the democratic management system with the workers' assembly as its basic form, support and guarantee the workers- assembly exercize of its authority in accordance with the law, strengthen the democratic management and supervision workers, and safeguard workers' lawful rights and interestsThe Board of Directors and the Board of Supervisors of State-owned enterprises and Wholly-funded State-owned enterprises shall have their respective staff.Establish a clear and transparent information disclosure system of major deliberations of State-owned enterprises and a disclosure of information to the outside.3. Strengthen the sense of responsibility, determine the boundaries between power and responsibility, establish and govern the main bodies to adapt to the accountability system.Directors, supervisors and the management shall abide by the laws and regulations and the company statute. They shall have a faithful and diligent obligation to the company. Their credit information shall be included in the National Credit Information Sharing Platform, and their breaches of trust shall be disclosed on the "Credit China" website. Directors shall participate to Board of Directors' meetings. They shall take responsibility of major resolutions by the Board of Directors. Where resolutions by the Board of Directors violate the laws and regulations, or contravene the company's statute, decisions by the Shareholders' Meeting, causing the company to suffer severe losses, directors shall be held responsible in accordance with the law. If a member of the management violates the laws or regulations or the companies' statute, causing the enterprise to suffer a loss, the enterprise shall be held responsible for the liability of the managers concerned in accordance with the law.If the executive directors and managers are not in time to report to the Board or the state-owned shareholders of major business issues and operating risks, the relevant personnel shall be held accountable according to law.The members of the Enterprise Party organization shall strictly investigate the responsibility in accordance with the relevant provisions of the party organizations when there are major mistakes and dereliction of duty and malfeasance in the course of their duties.According to the requirements of "Three Sistinctions", a necessary mechanism shall be established to tolerate mistakes and stop mistakes in the reform process, and motivate enterprise leaders to innovate business.(e) Uphold Party leadership and exert political advantage.1. Adhering to the Party's leadership and strengthening the Party's construction is the unique advantage of state-owned enterprises. To clarify the statutory position of Party organizations in the governance structure of State-owned enterprises, the general requirements of Party building work shall be incorporated into the company statutes of State-owned enterprises, to clarify the responsibilities and working methods of Party organizations in enterprise decision-making, execution, and supervision, and to make Party organizations become an organic party of enterprise governance structure. Full play shall be given to the leading core and political core role of Party organizations, to leadership of the ideological and political work of enterprises, support to the Board of Directors, the Board of Supervisors and managers in the fulfillment of their duties in accordance with the law, and in ensuring implementation of the Party and State policy.2. Full play shall be given to the supervisory role of discipline inspection committees, inspection work tours and audit. Party members among directors, supervisors and managers of State-owned enterprises shall report to the Party Committee on a regular basis every year on their personal performance and self-discipline.Superior level Party organs implement the system of delegation and the turn-over system toward the chair of the discipline inspection group of the State-owned enterprise (Commission for discipline inspection secretary). The chair of the Party discipline inspection group (Commission for discipline inspection secretary) must uphold principle and reinforce supervision.He chair of the Party discipline inspection group (Commission for discipline inspection secretary) may attend the meetings of the Board of Directors and board committees.3. Actively explore organic combinations of channels and methods of the principle whereby the Party manages cadres and the Board of Directors appoints the management.Uphold and improve the two-way entry, crossing leadership system. Leading members of State-owned enterprises Party groups (committees) where conditions exist may enter the Board of Directors, the Board of Supervisors, the management, through statutory procedures. Party members among members of the Board of Supervisors, of the Board of Directors, and of the management where conditions exist may become members of the Party group (committee) through statutory procedures. The office of Secretary of the Party group (committees) and of Chairman is normally held by one person. Promote the ingress of full-time deputy secretaries of the Central Enterprise Party Committee (CPC) to the Board of Directors.In the work whereby the Board of Directors appoints the management, superior-level Party committees and their organizational departments, and the Party committees of State-owned Assets Supervision organizations shall play the role of determining standards, standardizing procedures, participating in inspection and recommending candidates.Actively explore the Board of Directors' election of managers by having a number of candidates higher than available positions.III. Implement the Organization Well(a) Summarize experience in a timely way, an implement it in an orderly and sequentialy fashion.Based on the pilot projects standardizing the Board of Directors in teh construction of State-owned enterprises, summarize experience, and improve the system. Central enterprises of the State Council SASAC should be transformed into wholly state-owned enterprises or state-owned holding enterprises. Comprehensively regulate Board of Directors.The capital investment and the corporate governance structure of the operating State-owned enterprises should be refined according to the policy of employing multiple forms and apply particular policies to each of the enterprises in the company statute.Other central enterprises and local State-owned enterprises shall, in accordance with their own reality, be responsible for perfecting the governance structure of State-owned enterprise through the responsibility of the investing institution.(b) Carefully standardize operation, and do a good job of cohesion.State-owned enterprises should improve their corporate governance structure according to the requirements of perfecting the corporate governance structure of legal persons, comprehensively promote corporate governance in accordance with the law, perfect the companies' statute, specify the rights, obligations and responsibilities of internal organizations, realize their respective accountability, standardize their operations, connect with each other, and check them effectively.The State Council shall, in conjunction with the relevant departments and units, draw up the rules for the examination and approval of the Articles of Association of State-owned enterprises.The reform of state-owned enterprises, such as those finance and culture, shall be carried out in accordance with relevant provisions of the central government.State Council General OfficeApril 24, 2017(This document has been publicly issued)
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