The China Banking and Insurance Regulatory Commission ("CBIRC") has recently issued the Measures for the Regulatory Evaluation of Corporate Governance of Banks and Insurance Institutions (for Trial Implementation) (the "Measures"), immediately effective from the date of issuance.
The Measures contain 25 articles divided into five chapters which are general provisions, contents and methods of evaluation, evaluation procedures and division of work, evaluation outcomes and their application, and supplementary provisions. Among others, the part on contents of evaluation in the Measures mainly deal with eight aspects, including the Party's leadership, governance of shareholders, governance of the board of directors, governance of the board of supervisors and the senior management, internal risk control, governance of related-party transactions, market constraints, and governance of other stakeholders. The Measures propose, for the first time, two categories of evaluation indicators, namely indicators measuring compliance and indicators measuring effectiveness, and meanwhile, set out the major event items that will trigger a downgrading, so as to pay closer attention to evaluation of such prominent issues as effectiveness of corporate governance and corporate governance malfunction. Furthermore, with a view to encouraging good corporate governance practices, the Measures add to the category of indicators measuring effectiveness the indicators for bonus points to measure "soft indexes" including corporate culture, business philosophy, spirit of innovation and customer services among banks and insurance institutions.