A new set of guidelines was issued by the China Securities Regulatory Commission (CSRC) to improve corporate governance by limiting the power of executives to prevent abuse of authority and fraudulent transactions in listed companies. Currently, China has around 1,300 listed companies.Limiting the power of executives includes the following:

1. Highest authority is the conference of shareholders, not the board chairman and any major decisions must be approved by the conference including the appointment of accounting firms.
2. Senior managers and employees’s representatives must not account for more than half of those sitting on the board. This is to prevent the control by insiders and hopefully the leaking of information,
3. Previously, board members, supervisors and senior executives were banned from selling their shares during their tenure. With this guideline, they are given one year after the stocks are listed or six months after termination of services. The overriding point is that in any one year, they cannot sell more than 25% of their shares.

[News via Xinhua News Agency (22/3/2006) and chinadaily.com.cn (21/3/2006)]