Consultation on the Corporate Governance Code for Listed Companies (Revised Draft for Comments)

We refer to the China Securities Regulatory Commission's invitation to comment on the exposure draft for the Chinese Corporate Governance Code (the Code) and welcome the opportunity to provide feedback. We commend CSRC’s initiative to significantly strengthen corporate governance practices for Chinese listed companies.

Norges Bank Investment Management (NBIM) is the investment management division of the Norwegian Central Bank and is responsible for investing the Norwegian Government Pension Fund Global. NBIM is a globally diversified investment manager with USD 1.7 trillion at 31 December 2024, of which USD 40.7 billion (CNY 297.0 billion) was invested in the shares of 651 Chinese listed companies. As a long-term investor, we consider our returns over time to be dependent on sustainable economic, environmental, and social development, as well as on well-functioning, legitimate and efficient markets. We are active investors in over 65 countries and value robust corporate governance frameworks that protect all shareholders while enabling companies to create long-term value.

Key Areas of Support

We fully support several provisions in the proposed Code that enhance minority shareholder protection and corporate governance standards:

• Minority shareholder protection emphasised throughout the Code, particularly the specific provisions in Articles 8, 17, and 43
• Board accountability and transparency requirements, including director duties, performance evaluation, and disclosure obligations
• Independent director system with enhanced responsibilities for supervision and checks and balances
• Related-party transaction safeguards that require commercial substance, fair pricing, and proper board oversight

Suggested Enhancements

To further strengthen the Code and align with international best practice, we respectfully suggest consideration of several enhancements:

Governance Framework

• Implementation of a "comply or explain" mechanism to provide flexibility while maintaining accountability and spurring progress
• Stronger board independence thresholds and criteria, with majority independence and clear separation of Chairman and CEO roles
• Individual vote counting and disclosure for director elections to enhance shareholder accountability

Shareholder Rights

• Protection of pre-emptive rights in equity issuances to prevent dilution without shareholder consent
• Independent board approval requirements for material related-party transactions
• Majority of minority shareholders’ approval for extraordinary or significant transactions, with independent fairness opinions for control transactions.
• Enhanced disclosure requirements for board evaluations, attendance rates, and succession planning

Remuneration and Incentives

• Long-term incentive plans for CEOs with extended lock-in periods
• Simplified CEO pay structure

We believe these enhancements would reinforce China's corporate governance framework while respecting the unique characteristics of Chinese capital markets and allowing flexibility for individual company circumstances. Our suggestions are informed by our experience as a global investor and our commitment to supporting well-governed companies.

We appreciate the comprehensive approach taken to develop this Code and the opportunity to contribute to this important initiative. Please find our comments in the annex, which elaborate on these points and provide specific recommendations for each relevant article. We thank you for considering our perspective and remain at your disposal should you wish to discuss these matters further.

Yours sincerely

Carine Smith Ihenacho
Chief Governance and Compliance Officer

Jeanne Stampe
Lead Policy Advisor