CSRC: proposes to stipulate that the board of directors can recover profits that were falsely distributed and excessive compensation paid.

The China Securities Regulatory Commission has drafted the "Regulations on the Supervision and Administration of Listed Companies" and is now soliciting public opinions. The draft emphasizes strengthening the supervision of information disclosure. Firstly, it aims to prevent and combat "financial fraud" in the disclosure of information by listed companies. It requires that the financial accounting reports of listed companies be true, accurate, and complete, establishing a sound internal control system to ensure the authenticity of the information disclosed. It stipulates the responsibilities of the audit committee for the pre-audit and post-investigation of financial accounting reports, strengthening internal supervision and constraint. It also specifies that the board of directors should recover the profits distributed fraudulently and the excessive compensation. It prohibits affiliated parties, customers, suppliers, partners, and other relevant third parties providing services from cooperating in fraudulent activities. Secondly, it supplements the regulations on information disclosure. It clarifies the obligations and responsibilities of controlling shareholders, actual controllers, other shareholders, and counterparties to cooperate with listed companies in fulfilling their obligations of information disclosure. It also specifies the basis and requirements for exemption or temporary postponement of disclosure of state secrets, trade secrets, etc., balancing the shareholders' rights to access books and the principle of fair disclosure by listed companies, and detailing unauthorized changes in the use of funds raised.