In order to implement the "Opinions of the General Office of the State Council on the Reform of the Independent Director System of Listed Companies" (hereinafter referred to as the "Opinions") and optimize the independent director system of listed companies, the China Securities Regulatory Commission recently issued the "Administrative Measures for Independent Directors of Listed Companies" (hereinafter referred to as "Independent Directors" Measures "), which will come into force on September 4, 2023.

The "Measures for Independent Directors" will be open to the public for comments from April 14 to May 14, 2023. All sectors of the society generally support the content of the rules, and put forward suggestions for revision and improvement. The China Securities Regulatory Commission studied them one by one, carefully absorbed and adopted them, and revised the content of the rules accordingly.

The revised and improved "measures for independent directors" has six chapters and 48 articles, which mainly include the following contents: first, to clarify the qualifications and appointment and removal procedures of independent directors. Refine the criteria for judging independence, and make specific provisions on the professional knowledge, work experience and good moral character required to serve as an independent director. We will improve the selection system, optimize the selection mechanism of independent directors from the whole chain of nomination, qualification examination, election, continuous management and dismissal, and establish a nomination and recusal mechanism and a qualification system for independent directors. Clarify the part-time requirements for independent directors to serve as independent directors in up to three domestic listed companies in principle. The second is to clarify the duties of independent directors and the manner in which they perform their duties. Independent directors perform three duties, including participating in the decision-making of the board of directors, supervising potential major conflicts of interest, and providing professional advice on the company's business development, and may exercise special powers such as independently hiring intermediaries. Focus on decision-making responsibilities, and put forward relevant requirements for independent directors to participate in board meetings from the whole process before, during and after the board meeting. It is clear that independent directors supervise potential major conflicts of interest through platforms such as special meetings of independent directors and special committees of the board of directors. Independent directors are required to work on-site for not less than 15 days a year in listed companies, and should make work records, etc. Three is a clear performance guarantee. To improve the performance guarantee mechanism, listed companies should provide the necessary working conditions and personnel support for independent directors to perform their duties. Improve the relief mechanism for restrictions on the performance of independent directors. If independent directors encounter obstacles in performing their duties, they can explain the situation to the board of directors and require directors and senior managers to cooperate. If the obstacles still cannot be eliminated, they can report to the China Securities Regulatory Commission and the stock exchange. Four is clear legal responsibility. In accordance with the principle of matching responsibilities and rights, the considerations for determining the responsibility of independent directors and the circumstances in which they are not punished are specifically refined, reflecting the fact that they have been punished fairly and accurately. Fifth, clear transitional arrangements. A one-year transition period is set up for the establishment of the board of directors and special committees of listed companies, the mechanism of special meetings of independent directors, the independence of independent directors, the conditions of office, the term of office and the number of part-time employees. During the transition period, if the above-mentioned matters are inconsistent with the Measures for Independent Directors, they shall be gradually adjusted to comply with the provisions.

In the next step, the China Securities Regulatory Commission will guide the stock exchange and the China Association of Listed Companies to establish and improve supporting mechanisms such as independent director qualification, information database, and performance evaluation, increase training, and guide various entities to master the new requirements of reform. At the same time, we will continue to strengthen the supervision of independent directors of listed companies, and urge and ensure that independent directors play their due role.