The Ministry of Finance ("MOF") has recently issued the Interim Measures for Administration of State-owned Equity Directors of Financial Institutions (the "Measures"), with effect from January 19, 2020.
The Measures are divided into eight chapters which deal with criteria of selection and appointment and the term of office, job responsibilities and rights, working procedures, reporting mechanism, evaluation and assessment, supervision and administration, etc. The Measures provide that in principle, the term of office of a state-owned equity director should not be longer than the term of office of the board of directors of the financial institution where such director is dispatched, and such director will be replaced at the end of his or her term of office. A director may act in this capacity in the same financial institution for up to two terms of office, if the institution that dispatches him or her to the financial institution grants an extension of the term of office. The term of office of the board of directors of a financial institution should be determined in accordance with applicable laws and the articles of association. In case the term of office of the board of directors is not stipulated by any relevant law or in the articles of association, the term of office of the board of directors should not exceed three years. In addition, the Measures require that institutions dispatching the aforesaid directors shall have in place the internal control systems and confidentiality mechanisms, adding that measures should be taken to strictly regulate stock trading of state-owned equity directors and strictly prohibit them from conducting insider trading or divulging to external parties any non-public information of financial institutions.