On July 31, four government bodies—the National Financial Regulatory Administration, the People's Bank of China, the China Securities Regulatory Commission, and the Ministry of Finance—jointly released the Implementation Opinions on Improving the Governance of Financial Institutions (hereinafter referred to as the Implementation Opinions). This document, structured into nine parts with 22 specific measures, focuses on enhancing Party leadership, improving shareholder governance, increasing the effectiveness of governance body operations, strengthening internal governance, refining oversight, and fostering a healthy financial ecosystem.

The Implementation Opinions set a target for 2029: to establish a governance mechanism for Financial Institutions characterized by clear boundaries of authority and responsibility, aligned incentives and constraints, rigorous risk management, and standardized, efficient operations. This is expected to significantly bolster the stability and risk resilience of the financial system, while notably improving the quality and efficiency of financial services in supporting high-quality development.

Regarding the consolidation of the Party's overall leadership, the Implementation Opinions mandate strengthening the centralized, unified leadership of the Party Central Committee over financial work. They require Financial Institutions to improve the implementation mechanisms for the Party Central Committee's major decisions and strictly adhere to the "first agenda" system and reporting procedures for significant matters. The document calls for deeper integration of Party leadership with corporate governance. In state-owned Financial Institutions, requirements such as incorporating Party building into the company's articles of association, implementing "two-way entry and cross-appointment" of leadership, and pre-discussion of major operational matters by the Party committee (or Party group) must be strictly followed. This aims to leverage the Party committee's guiding role in direction, overall management, and ensuring implementation, while also promoting the expansion of Party organizations and their work coverage within non-public Financial Institutions.

The Implementation Opinions emphasize the strict enforcement of the central government's eight-point regulation and its implementation rules. It calls for resolutely dismantling mindsets like "exceptionalism," "elitism," and "specialism." Supervision over the "top leaders" and leadership teams of Financial Institutions must be strengthened, and mechanisms for allocating power and constraining its exercise should be improved. Accountability requirements for preventing and resolving financial risks must be strictly implemented, with intensified efforts to pursue responsibility. The document advocates for a simultaneous investigation of misconduct and corruption. It calls for severe crackdowns on issues such as "relying on finance to profit from finance," "relying on regulation to profit from regulation," and corruption hidden behind financial risks. The goal is to promote reform and governance through case analysis, continuously purifying the political ecosystem. Deepening and expanding warning education, and fostering a culture of clean and honest finance, are also key components.

On shareholder governance, the Implementation Opinions propose building a "firewall" between industrial and financial capital. This involves tightening entry standards for shareholders, conducting look-through identification of major shareholders, actual controllers, and beneficial owners of Financial Institutions. It strictly prohibits concealing control relationships, affiliated relationships, and concerted action arrangements, and guards against false capital contributions, circular capital injections, and capital flight. Shareholder behavior must be strictly regulated, with a ban on abusing shareholder rights or improperly interfering in the management and operation of Financial Institutions. Financial Institutions are prohibited from transferring benefits to their shareholders and related parties. The document also calls for establishing a system to recover improper gains from shareholders and a post-event mechanism for recovering compensation for risk responsibilities. Simultaneously, the rights of minority shareholders regarding information, participation in decision-making, and supervision over major matters must be protected.

To enhance the operational effectiveness of governance bodies, the Implementation Opinions require optimizing board structures, clarifying board responsibilities, and strengthening the guarantees and performance evaluations for directors. The effectiveness of independent directors must be improved by preventing major shareholders and insiders from improperly interfering in their selection. Managerial performance should be standardized by establishing and strictly enforcing accountability systems, improving evaluation mechanisms for senior management, and promoting adherence to high ethical standards and diligent, honest performance of duties.

Regarding internal governance capabilities, the Implementation Opinions guide Financial Institutions to establish incentive and constraint mechanisms that support sustainable development and strategic goal achievement. Specifically, internal performance appraisals must adhere to the principle of balancing returns with risk, emphasizing long-cycle assessment to prevent short-term excessive incentives. The system for deferred payment and clawback of performance-based compensation for senior management and key personnel must be strictly implemented. Financial Institutions are also urged to improve their internal control systems and comprehensive risk management frameworks. This includes strengthening control over key positions, core businesses, and financial resources, and continuously enhancing capabilities in risk identification, assessment, evaluation, measurement, monitoring, control, and mitigation to achieve full coverage of risk prevention across all subsidiaries, businesses, and products.

In the area of improving corporate governance regulation, the Implementation Opinions call for a risk-oriented, classification-based regulatory approach. Following the principle of substance over form, look-through supervision should be applied to shareholder equity, related-party transactions, and other areas. Entry standards for directors and senior management must be tightened to prevent the "tainted personnel flow" of individuals with legal violations within the financial industry. Severe penalties for illegal activities and higher costs of non-compliance are also emphasized. Risk monitoring and early warning systems for corporate governance should be strengthened, and regulatory digitalization and intelligence should be promoted to achieve early identification, early warning, early exposure, and early disposal of risks.

The Implementation Opinions also stress the need to protect the legitimate rights of stakeholders, including financial consumers. This involves strengthening financial literacy and consumer education, legally protecting consumers' rights to information, independent choice, and fair dealing, and improving diversified mechanisms for resolving financial disputes. Financial Institutions are encouraged to leverage their unique characteristics and strengths to excel in the "five major articles" of finance: technology finance, green finance, inclusive finance, pension finance, and digital finance. They should also actively practice environmental, social, and governance concepts.

Finally, the Implementation Opinions propose improving the legal system for corporate governance, strengthening central-local government coordination, and nurturing the soft power of financial culture. It aims to guide Financial Institutions and financial professionals in establishing correct business, performance, and risk perspectives, ultimately fostering a positive, upright, and healthy financial ecosystem.