China Securities Regulatory Commission, the National Audit Office, China Banking Regulatory Commission and China Insurance Regulatory Commission have jointly announced the Basic Standard for Enterprise Internal Control, which requires listed Chinese companies to comply from 1 July, 2009 onward.
The new rule requires listed companies to conduct self-evaluation of their internal controls, disclose an annual evaluation report and employ qualified agencies to audit the effectiveness of the controls. The Basic Standard is intended to bring stronger corporate governance to China's listed companies, and is often compared to the Sarbanes-Oxley law in the US. Hence the nickname "China SOX" or simply C-SOX.
The Basic Standard will have a direct impact on over 900 companies listed on the Shanghai Stock Exchange and about 800 companies listed on the Shenzhen Stock Exchange, so it will be broadly felt in the Chinese corporate environment. Also, unlisted large and medium–sized Chinese companies are encouraged to adopt the standard. My estimate is that over 2,000 listed and state-owned companies will need to comply with the Basic Standard in 2009.
There's lots of work going on right now by product and service providers to launch C-SOX solutions before the compliance deadline. Stay tuned…
Vast Talent's C-SOX resources can be found here: http://www.vast-talent.com/en/compliance_solution_for_china_basic_standard_for_enterprise_internal_control_csox.html
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