China has added environmental and social responsibility requirements to disclosure rules for publicly listed companies.
The China Securities Regulatory Commission (CSRC) has issued revised disclosure rules for publicly listed companies for consultation.
The draft rules propose revisions to improve the chapter on corporate governance. To date, the provisions related to corporate governance have been “scattered” across various chapters, the CSRC said.
The revisions enhance annual disclosures on the performance and functions of the board of directors and its special committees, as well as information on controlling shareholders and actual controllers. Companies are also required to introduce internal control systems to facilitate control over and management of subsidiaries, the draft rules say.
A new chapter on environmental and social responsibility has also been added, requiring listed companies to disclose administrative penalties arising from environmental issues. The rules also encourage companies to “voluntarily” disclose the measures they have taken during the reporting period to reduce carbon emissions, alleviate poverty, and revitalise rural areas.
The chapter on bonds has been adjusted to expand the scope of disclosure and require companies to disclose the status of bonds that exist as of the date of the periodic report.
The draft rules also add obligations to disclose all guarantee contracts that amount to more than 10 percent of net assets. Disclosures on funds being used by controlling shareholders and their related parties have been expanded to include “other related parties”.
Companies will also be required to disclose greater information about the industry and the business situation it is engaged in, including major changes that have occurred during the reporting period. The reasons for changes in major financial data such as revenue, costs, and expenses should be disclosed, as well as specific information about the company’s top five customers and suppliers.
The consultation, available here, is open for comments until 7 June 2021.