In order to encourage the investment trust industry to implement its fiduciary management responsibilities and fulfill the duty of care and loyalty of a good manager, the Financial Supervisory Commission has proposed "ten measures to strengthen the governance of the investment trust industry" in terms of corporate governance, internal control and information disclosure, which will be implemented in two phases; among them, the first The second phase is expected to be implemented by the end of June next year. It will standardize the part-time behavior of the person in charge and require investment credit companies with a certain asset size to set up "non-interested directors" with similar roles as independent directors, or issue a letter to regulate the part-time behavior of the person in charge. Violators may be punished with warnings, suspension of business, dismissal, etc. The market estimates that seven investment credit companies including Cathay Pacific and Yuanta will apply.
Huang Houming, deputy director of the Securities and Futures Bureau of the Financial Supervisory Commission, said today that considering the continuous development of my country's asset management market in recent years, the asset management scale of investment trust companies has grown rapidly, and the risk management requirements for their business operations have increased accordingly; in addition, in view of the recent lack of internal control of stakeholders in investment trust companies, Failure to comply with regulations will affect the reputation of the investment trust industry and the rights and interests of investors. In order to encourage the investment trust enterprise to implement its fiduciary management responsibilities and fulfill the duty of care and loyalty of a good manager, the Financial Supervisory Commission has proposed a total of ten measures to strengthen the governance of the investment trust enterprise in terms of corporate governance, internal control and information disclosure.
Huang Houming said that the scope of strengthening investment trust governance measures is investment trusts with assets under management of more than 1 trillion yuan. A total of seven investment trusts include: Yuanta, Cathay Pacific, Qunyi, Fubon, Fuhua, Allianz, and Uni-President Investment Trust. The measures will be implemented in two phases. In other words, the seven domestic investment trusts must establish "non-interested directors" before the end of June 2027, otherwise it will be considered a violation.
Huang Houming pointed out that the strengthened measures will be implemented in two phases. The first phase is to be completed by the end of this year and includes five measures. The first is to strengthen corporate governance and honest operations and implement the responsibilities of senior management. The second is to urge the investment trust enterprises to strengthen self-examination. The third is to review the internal control management of the investment trust enterprises through external inspection mechanisms. The fourth is to plan and establish a stakeholder declaration and transaction control mechanism for the investment trust enterprises. The fifth is to strengthen the education and training of board members.
As for the "second phase", it will be completed by the end of June next year. First, investment trust companies with an asset management scale of more than 1 trillion yuan must set up "non-interested directors" and corporate governance committees to revise laws and regulations; second, improve the internal control standards and audit systems of investment trust companies; third, issue letters and orders to standardize the part-time behavior of responsible persons; fourth, improve the notification and disclosure mechanism of major incidents; and fifth, strengthen the reporting standards for major event announcements.
In addition, there are three major aspects to strengthen the governance of the investment trust industry. The first is "corporate governance": investment trust enterprises above a certain scale will set up non-interested directors, and the non-interested directors will set up a corporate governance committee to be responsible for the identification and prevention of conflicts of interest in the enterprise, and the planning of internal regulations or operating standards related to the enterprise. In particular, investment trust companies are urged to implement the responsibilities of the board of directors and general manager, establish an effective accountability mechanism, strengthen legal compliance, internal audit and risk management functions, and create a culture of high integrity management.
The second is "internal control": 1. Improve the internal control standards and audit systems of the investment trust industry, incorporate insider information review and audit mechanisms, and strengthen relevant control and audit mechanisms in response to practical implementation and risk management needs. 2. Urge investment trust enterprises to strengthen self-examination, fulfill their internal control and risk management responsibilities, and strengthen the design and implementation of relevant internal control systems. 3. Review the management of the internal control system of investment trust enterprises through external audit mechanisms.
The next step is "information disclosure", etc., including improving the reporting and disclosure mechanism of major incidents: 1. Establishing "Things to be followed by investment trust and investment advisory companies in reporting major incidents" to strengthen the identification, reporting and related handling of major incidents. 2. During the reporting process of major incidents, additional substantive mandatory investment undertakings must be disclosed to the public.
