Bond defaults have reached record highs. Photo: iStock

The head of the China Securities and Regulatory Commission (CSRC), Liu Shiyu, hinted on Monday that the commission is looking at amending the corporate governance code for listed companies, China Securities Journal reported on Tuesday.

The impending move by Liu and his agency aims to target companies who “challenge” the commission’s authority, such as falsely stating their value on the stock market or falling foul of “proper company management,” the report said. The CSRC is acting to protect medium to small investors and also wants to push its corporate governance code in line with international standards.

The CSRC is currently in the midst of talking to the China Association of Listed Companies (CAPCO) as it seeks to amend the 2002 Code of Governance For Listed Companies to push it toward international standards, but also to include the so-called socialist market economy elements such as party leadership within the organizational structure of companies, the report added. It has also sought to tie in recommendations from an economic report from China’s reform commission which was concluded in April this year.

The push towards stock market reform was mooted as early as September of last year, when Liu said during a state-level corporate governance workshop that the Code of Governance required amending to increase the level of corporate governance in line with capital markets developments worldwide.

Liu also stressed then that China was one of the proponents of OECD corporate governance guidelines, and thus would be required to review its corporate governance code quickly.