A view of CBD area in Beijing, China. Photo:Xinhua

China's central government-owned companies should establish chief compliance officer and compliance reviews must be embedded in the business management process, a document released by the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) said.

Compliance management is a key institutional measure for enterprises to effectively prevent business risks, and is an urgent need to continuously improve corporate governance to ensure the virtuous cycle and sound development of enterprises, experts noted.

According to the document, related firms are not required to create new leadership positions, and the general counsel serves concurrently as the chief compliance officer, responsible for people who are in charge of the enterprise. The officer will guide the affiliated departments to strengthen compliance management. 

The document also required that central enterprises should embed the compliance review as a mandatory procedure in the operation and management process, and the review opinions of major matters should be signed by the chief compliance officer.

"The document is a further regulation on the modern enterprise system and it will ensure them comply with international enterprises," Bai Ming, deputy director of the international market research institute at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Sunday.

Compliance management department and other sectors should improve review standards, processes, and priorities according to their responsibilities and authority, the document said.

Central enterprises will establish a mechanism to rectify irregularities, improving rules and regulations as well as optimizing business processes to close management loopholes and improve the level of compliance management.

If central enterprises have violations due to the lack of compliance management, SASAC can summon relevant enterprises and order them to rectify; if they caused losses or adverse effects, the commission will carry out accountability according to related provisions.

The document will come into force on October 1, 2022.