Governance Briefing — September 6, 2021
China’s State-owned Assets Supervision and Administration Commission issued trial Measures for the Compliance Management of Central Enterprises on September 6, 2021, establishing board-led compliance governance across state-owned groups.
Executive briefing: On 6 September 2021 SASAC released the Measures for the Compliance Management of Central Enterprises (Trial), requiring centrally administered state-owned enterprises (SOEs) to build comprehensive compliance programmes anchored in board oversight, chief compliance officers, and enterprise-wide risk controls. The measures respond to anti-corruption priorities and globalisation risks facing Chinese SOEs.
Key requirements
- Board responsibility. Boards of directors must establish compliance management committees, set annual priorities, and evaluate management performance against compliance objectives.
- Chief compliance officer. Enterprises must appoint chief compliance officers with independent authority, supported by dedicated departments that coordinate legal, audit, and internal control functions.
- Risk-based controls. SOEs must conduct compliance risk assessments covering domestic and overseas operations, third parties, finance, competition, data, and export controls, integrating findings into decision making.
Implications for boards
- Central SOEs. Boards should embed compliance objectives into annual business plans, link executive evaluations to compliance performance, and document escalation paths to SASAC.
- Global joint ventures. Partners of Chinese SOEs need to align joint venture governance charters with the Measures, clarifying compliance officer reporting lines and information-sharing duties.
- Public benefit enterprises. SOEs operating hospitals, universities, and infrastructure must extend compliance risk assessments to regulated sectors, including data localisation and public procurement.
Action checklist
- Establish or refresh board-level compliance committees with charters aligned to SASAC expectations.
- Appoint chief compliance officers and develop independence safeguards, including direct access to the board and audit committee.
- Run comprehensive risk assessments across domestic and overseas operations, documenting mitigation plans and SASAC reporting templates.
Sources
- Measures for the Compliance Management of Central Enterprises (Trial)
- China issues measures to tighten compliance management in central SOEs
Zeph Tech helps central SOEs and joint ventures operationalise SASAC’s compliance measures through governance charters, risk assessments, and cross-border control testing.