Starting from 1 October 2017, Measures for the Compliance Management of Securities Companies and Securities Investment Fund Management Companies promulgated by the CSRC in June 2017 came into effect. Amongst other requirements, the Measures (available here in Chinese) provide that:
- The Chief Compliance Officer is a member of the senior management.
- The Securities Company or the Securities Investment Fund Management Company cannot terminate the employment of the Chief Compliance Officer without a “proper cause” prior to the expiry of the term of his employment. A “proper cause” includes: resignation by the Chief Compliance Officer; an order to replace the Chief Compliance Officer by the CSRC; and other circumstances where there is sufficient evidence showing that the Chief Compliance Officer is unable to perform his duties or fails to fulfil his duties diligently.
- Where the Securities Company or the Securities Investment Fund Management Company refuses to adopt the compliance advice given by the Chief Compliance Officer, such matter shall be submitted to the Board of Directors to decide.
- For any important meeting that the Securities Company or the Securities Investment Fund Management Company will hold or any meeting that the Chief Compliance Officer has requested to attend, a prior notice shall be served on the Chief Compliance Officer. The Chief Compliance Officer shall have the right to attend such meetings, review and make copies of the meeting materials.
- The annual income of the Chief Compliance Officer (on an all-in basis) must not be less than the medium of the senior management, and the annual income of each other compliance staff shall not be less than the average income of the other employees ranked at the same level of that company.
It is hoped that the Measures will afford further protection to the compliance personnel especially the Chief Compliance Officer in exercising his or her functions, and bring about a higher level of compliance culture.