Tips for compliance management of central SOEs

By Wei Jie, Tiantai Law Firm

On 16 September 2022, the State-owned Assets Supervision and Administration Commission (SASAC) of the State Council formally issued the Measures for Compliance Management of Central State-owned Enterprises, which came into effect on 1 October 2022.

Wei Jie, Tiantai Law Firm
Wei Jie
Tiantai Law Firm

Compared with the Guidelines on Compliance Management of Central State-owned Enterprises (for Trial Implementation) issued by the SASAC in 2018, the measures further update the provisions on compliance management of central state-owned enterprises (SOEs), with significant adjustments and expansions in terms of legislative purpose and structure, working principles, organisation and responsibilities, as well as guarantee mechanisms.

The measures adhere to the overall legislative thinking of the SASAC for the construction of compliance management of central SOEs put forward since 2015, and serve as the main basis for constructing and improving the compliance management system of central SOEs.

Based on consistent legislative purpose, the measures emphasise “deepening the construction of central SOEs under the rule of law”. The general provisions of the measures clearly provide that “to deepen the construction of central SOEs under the rule of law, promote central SOEs to strengthen compliance management, effectively prevent and control risks, and strongly guarantee the deepening of reform and high-quality development”, which is consistent with the specific expression of the Opinions on Further Deepening the Construction of Central State-owned Enterprises under the Rule of Law, implemented by the SASAC on 17 October 2021.

The measures upgrade the legislative structure based on the above-mentioned guidelines, providing more effective guidance for central SOEs to strengthen their compliance management systems. In conjunction with the actual situation and latest experience of central SOE compliance management system construction, the measures have updated the legislative framework, updating sections on compliance organisation and the operation mechanism in the guidelines, clarifying the guarantee mechanism of compliance management through chapters on compliance culture and informatisation construction, respectively, and addressing system construction, and supervision and accountability, as independent chapters. The section on compliance management organisation and responsibilities is further expanded, and the number of articles increased from 31 to 44, most of which were revised and improved.

The measures emphasise the Party’s leadership throughout the whole process of compliance management, and adjust the division of compliance management powers and responsibilities. The measures add the organisational status and corresponding responsibilities of the Party committee in the compliance management system, establish the leading role of the Party committee throughout the compliance management, and further emphasise that central SOEs should strictly comply with regulations and systems, and the Party building institutions should promote the effective implementation of regulations and systems.

As many central SOEs do not have a board of supervisors, the measures delete the content related to the board of supervisors’ supervisory duties, strengthen the duties of the person with chief responsibility and clarify the division of compliance management powers and responsibilities between the compliance management department and other functional departments.

Thanks to the continual promotion of central SOE compliance management system construction in recent years, each central SOE has initially completed the construction of its compliance management system, laying the foundation for the SASAC to directly supervise and assess the overall implementation of central SOE compliance work. Therefore, the measures also add the content of powers and responsibilities of the SASAC, and the accountability for violations.

The measures highlight the system construction and guarantee mechanism, and arrange the parts of compliance culture informatisation construction as independent chapters based on the experience of central SOEs. The measures clarify the pragmatic and efficient principle of compliance management work and the trend of informatisation, and guide enterprises to incorporate compliance systems, typical cases, compliance training and violation records into information systems, and make full use of information technology to quickly identify and timely dispose of risks.

The measures are important for central SOEs to build, consolidate, strengthen and push forward their compliance management work. Central SOEs are advised to improve and optimise their compliance management work in accordance with the latest requirements, with specific attention paid to the following:

  • Clearly define the organisational system of corporate compliance management according to relevant regulations, responsibilities of the main person in charge, and of the compliance committee, for co-ordination and promotion, and the division of powers and responsibilities between the compliance management department and other functional departments. Also, appoint a chief compliance officer to lead the compliance management department, as well as organise and guide the relevant work of the enterprise and its affiliated units.
  • Effectively create a compliance management system adapted to the business model and management reality of the enterprise. Based on the enterprise’s focus areas and high-risk factors, formulate special guidelines on compliance management, or prepare a compliance control list for business processes and the operating measures for compliance management of relevant positions. Timely revise and improve the relevant rules and regulations according to updates and changes in laws and regulatory policies, and other external regulations, and effectively inspect and evaluate the implementation.
  • Improve the compliance mechanism of the whole business operation process. Comprehensively summarise the compliance risks in business operation and management activities. Build a basic compliance system, make full use of information technology tools, and further optimise and improve the relevant mechanisms on risk assessment and early warning, violation rectification, reporting and accountability, and compliance assessment.
  • Incorporate compliance management-related content into the rule of law study of the Party committee to strengthen compliance awareness among enterprise leaders, conduct regular and customised compliance training updates, and cultivate sustainable compliance culture with enterprise characteristics, laying a solid foundation for the long-term operation of corporate compliance management.

Wei Jie is an associate at Tiantai Law Firm


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