Core Viewpoint - The China Securities Regulatory Commission (CSRC) has revised the Corporate Governance Code, which will take effect on January 1, 2026, focusing on enhancing the supervision of key individuals in listed companies and improving governance mechanisms [1][2]. Summary by Relevant Sections Governance Regulation Optimization - The revised Corporate Governance Code aims to strengthen the responsibilities of key individuals, including directors and senior management, to prevent abuse of control by major shareholders and actual controllers [2][3]. - The update is a comprehensive upgrade of existing rules, emphasizing a full-chain management system for directors and senior management, and enhancing the regulation of major shareholders and actual controllers [2][3]. Incentive and Restraint Mechanisms - A significant highlight of the revised code is the establishment of a salary management system that aligns the compensation of directors and senior management with company performance [3]. - Companies must disclose reasons if the average performance-based salary of directors and senior management does not decrease when the company transitions from profit to loss or experiences a larger loss compared to the previous fiscal year [3]. Regulation of Major Shareholders and Actual Controllers - The revised code imposes strict limitations on potential major adverse impacts from competing businesses and enhances disclosure requirements for non-major adverse impacts [3][4]. - It also strengthens the regulation of related party transactions, requiring companies to adhere to decision-making procedures and information disclosure obligations [4]. Improvement of Director and Senior Management Supervision - The revised code establishes a closed-loop supervision system for directors and senior management, detailing responsibilities during appointment, performance, and departure [5][6]. - It mandates that companies disclose detailed information about director candidates before shareholder meetings and requires candidates to commit to the accuracy of their disclosed information [6]. Accountability After Departure - Companies are required to arrange for accountability and recovery of responsibilities for directors and senior management after their departure, ensuring that obligations are fulfilled even after leaving [7].

Core Viewpoint - The China Securities Regulatory Commission (CSRC) has revised the Corporate Governance Code, which will take effect on January 1, 2026, aiming to enhance the governance of listed companies and protect the interests of minority shareholders [1]. Summary by Key Areas Improvement of Board and Executive Supervision - The new regulations establish comprehensive guidelines for the appointment, performance, and departure of directors and executives, emphasizing the need for strict qualification reviews and enhanced disclosure of conflicts of interest [1]. - Companies are required to arrange for accountability measures for executives upon their departure, ensuring a review of their duties during their tenure [1]. Establishment of Incentive and Restraint Mechanisms - Listed companies must create a compensation management system that aligns executive pay with company performance and individual contributions, promoting a balance between incentives and constraints [2]. - The regulations encourage deferred compensation and clawback mechanisms to discourage short-termism and align management interests with long-term company growth [2]. Regulation of Controlling Shareholders and Actual Controllers - The new rules impose strict limitations on potential conflicts of interest and require enhanced disclosure of non-material competitive activities to improve transparency [3]. - The responsibilities of the board in identifying and reviewing related party transactions have been clarified to prevent improper dealings from the outset [3]. Coordination of Rules and Systematic Improvement - The new regulations ensure alignment with existing laws such as the Securities Law and the Management Measures for Independent Directors, enhancing the overall regulatory framework [4]. - The CSRC has allowed a transition period for companies to adjust their internal systems in light of the new Corporate Governance Code, providing ample preparation time before the implementation date [4].