Promulgation of Measures for Compliance Management of Central Enterprises put forward stricter requirements for compliance of central enterprises
Xueyan Li
Chance Bridge, Beijing
Yao Guo
Chance Bridge, Beijing
Introduction
In 2022, China’s state-owned Assets Supervision and Administration Commission of the State Council (SASAC) evaluated the new status faced by central enterprises, and drafted the Measures for Compliance Management of Central Enterprises (Order No 42 of the SASAC, hereinafter referred to as the ‘Measures’) on the basis of summarising the practice of compliance management of central enterprises and extracting experience from the advanced practices of large international enterprises. The Measures were issued in the form of a decree by the SASAC and put forward more precise and stricter requirements for the central enterprises to enhance compliance management through departmental rules.
Main contents of the Measures
The Measures comprise of eight chapters and 42 articles. The first chapter sets out the General Provisions, which mainly include the formulation background, scope of application, definition, competent departments, working principles and funding guarantee.
The second chapter offers the Organisation and Responsibilities, which mainly present the compliance management responsibilities of different subjects such as the Party committee and the board of directors.
The third chapter entails System Construction and provides details on specific requirements of compliance management of central enterprises in system construction.
The fourth chapter is the Operational Mechanism, which lays down rules of mechanism on the compliance risk identification and assessment, compliance review, compliance risk reporting, violation rectification, violation reporting, violation accountability, compliance management system and effectiveness evaluation.
The fifth chapter is Compliance Culture. This chapter indicates that compliance management should be incorporated into the study plan of the Party committee. In addition, details on the regular training mechanism, strengthening compliance publicity and education, as well as fostering compliance culture with enterprise characteristics, are presented in this chapter.
The sixth chapter concerns Informatisation Construction. Reported in this chapter are the main components of the compliance management information system, embedding compliance requirements and prevention measures on the information flow, information system interconnection and real-time dynamic monitoring.
The seventh chapter is Supervision and Accountability, which includes the accountability caused by inadequate compliance management and the legal responsibility for neglect of duty in the process of managing.
Chapter eight comprises rules on Supplementary Provisions, which further clarifies that the central enterprises shall improve the compliance management system considering the actual situation, and promote the subordinate units to establish the system, while the local SASAC shall refer to the Measures and guide the enterprises to strengthen compliance management.
The Measures is not the first statute that clarifies the requirements of compliance management of central enterprises. Documents and regulations on compliance management of central enterprises had already been applied before the promulgation of the Measures, among which the most informative one is the ‘Guidelines for Compliance Management of Central Enterprises (for Trial Implementation)’, (hereinafter referred to as the ‘Guidelines’).
The Measures are more rigid, offering more comprehensive information, higher requirements and more practical approaches compared with the Guidelines. Specifically, the first feature in Measures is clarification of the responsibilities of relevant stakeholders in compliance management. The compliance management responsibilities of Party committees (Party groups), board of directors, managers and chief compliance officers of enterprises are stipulated on the basis of the corporate governance structure. Moreover, the ‘three lines of defence’ responsibilities regarding business and functional departments, compliance management departments and supervision departments are presented in the Measures.
The second feature is to establish and improve the compliance management system. Central enterprises are required to formulate the basic system, specific system or special guide of compliance management considering the actual situation, build a hierarchical and classified compliance management system, and strengthen the inspection of the implementation of the system. The third attribute is to comprehensively standardise the compliance management process. The Measures put forward clearer requirements for setting up mechanism on compliance risk identification, assessment, timely warning, compliance review, risk response, problem rectification, accountability, and require closed-loop management of compliance risk.
The fourth feature is to actively foster a compliance culture. Central enterprises are essential in enhancing the compliance awareness of all employees and creating a compliance culture through specific exploration of the rule of law, business training, and strengthening publicity and education.
The fifth attribute is to enhance the informatisation construction of compliance management. The Measures promote central enterprises to use information technology to incorporate compliance requirements into business processes and use big data and other technologies to carry out real-time dynamic monitoring of key areas and key nodes, so as to achieve immediate warning and quick handling of compliance risks.
Exploration of compliance management of central enterprises before the implementation of the Measures
As mentioned above, the Measures is not the first statute to put forward the requirements for compliance management of central enterprises. The compliance management of central enterprises has undergone three stages, including initial exploration stage, accelerated development stage and in-depth promotion stage.
In December 2014, the SASAC issued the Notice on Promoting the Implementation of the New Five-Year Plan for the Legal Work of Central Enterprises (No 193 [2014] of the SASAC), requiring that the construction of the enterprise compliance management system should be strictly improved, and special supporting systems should be formulated for key areas such as anti-commercial bribery, anti-monopoly and anti-unfair competition. The compliance management of central enterprises has entered the initial stage of exploration.
In November 2018, SASAC issued the Guidelines, which established the basic principles of compliance management of central enterprises, defined the responsibilities, key points, operation modes and guarantee mechanisms of compliance management within enterprises, initially formed the basic framework of compliance management of state-owned enterprises in China, and marked a new stage of accelerated development of compliance management of central enterprises.
In 2022, the Measures were promulgated, which put forward explicit and strict requirements for the central enterprises to further enhance compliance management, marking that the compliance management of central enterprises has progressed to a new stage of in-depth promotion.
The Measures will come into effect on 1 October 2022. In answer to this reporter’s question, the head of the Policy and Regulation Bureau of the SASAC on the Measures for Compliance Management of Central Enterprises said, ‘in the next step, the SASAC will promote the central enterprises to intensely implement the requirements of the Measures, improve the system and mechanism, refine the work measures, and implement all tasks’. We will continue to follow up.