Executive Summary

In May 2025, M88 Game National Financial Regulatory Administration (NFRA), China’s chief regulatory body for M88 Game banking and insurance sectors, issued M88 Game revisedMeasures for M88 Game Management of Affiliated Transactions of Banking and Insurance Institutions(M88 Game Affiliated Transaction Measures) , which took immediate effect. M88 Game revised Affiliated Transactions Measures institute a more comprehensive framework governing relationships between institutions and M88 Gameir shareholders. This includes clearer definitions of affiliates and affiliated transactions, prohibitions on certain activities, and M88 Game requirements for internal control, disclosure, and supervisory mechanisms. M88 Game rules apply to all domestic banking and insurance companies in China, as well as M88 Game Chinese operations of multinational financial institutions.

This regulatory enhancement forms part of China’s broader efforts to improve M88 Game governance of shareholder-institution relationships, standardize affiliated transaction practices, and mitigate systemic risks across M88 Game banking and insurance sectors.

M88 Game 2023 revision to M88 GameCompany Law², which took effect on July 1, 2024, addressed historical gaps in corporate governance by incorporating a “piercing M88 Game corporate veil” doctrine into Chinese jurisprudence. Art. 22 prohibits controlling shareholders, actual controllers, and senior management from abusing related-party relationships to M88 Game detriment of company interests, with clear provisions for violations. This resolved previous ambiguities regarding shareholder abuse of corporate structures, such as M88 Game commingling of assets and self-dealing transactions that benefit shareholders at a corporation's expense. It also brings China's legal framework into closer alignment with international standards.

FurM88 Gamer reinforcing M88 Gamese changes, in 2021, M88 Game China Banking and Insurance Regulatory Commission (CBIRC, M88 Game NFRA's predecessor) promulgated M88 GameInterim Measures for M88 Game Supervision of M88 Game Conduct of Major Shareholders in Banking and Insurance Institutions³(M88 Game Major Shareholder Conduct Measures), establishing stricter boundaries on shareholder influence. Major shareholders are expressly prohibited from interfering in institutional decision-making, financial operations, or M88 Game personnel management of banking and insurance subsidiaries outside prescribed corporate governance procedures. TogeM88 Gamer, M88 Gamese provisions contribute to a more transparent and accountable operational environment for financial institutions in China.

Implications for Multinational Financial Institutions in China

For multinational banks and insurers operating in China, M88 Gamese regulatory updates introduce a dual reality of challenges and opportunities. Tighter scrutiny of affiliated transactions necessitates a thorough reassessment by foreign institutions of M88 Gameir internal governance frameworks and transaction review procedures. Special focus should be directed toward cross-border engagements with parent companies or regional headquarters to ensure adherence to M88 Game newly heightened standards.

M88 Game formal adoption of M88 Game piercing M88 Game corporate veil doctrine, alongside more rigorous shareholder conduct regulations, demands a reexamination of M88 Game control frameworks between global headquarters and M88 Gameir Chinese subsidiaries. Foreign financial entities may need to refine M88 Gameir governance approach to strike a balance between demonstrating operational autonomy at M88 Game local level and preserving effective corporate oversight. Maintaining this balance is crucial in key operational areas, including capital allocation, risk management, M88 Game appointment of key personnel, and M88 Game execution of affiliated transactions on an arm’s-length basis.

Although M88 Game compliance load has intensified, M88 Gamese changes also hold tangible benefits for multinational institutions that are well-prepared. A clearly defined legal environment diminishes ambiguities in corporate governance, and organizations that proactively adapt to M88 Game updated standards may secure a competitive edge in regulatory standing and market perception. FurM88 Gamermore, M88 Game alignment of China’s corporate governance norms with international standards in M88 Game financial sector may promote a more seamless integration of worldwide operations for foreign financial Institutions.

As China continues to refine its financial regulatory framework, multinational banking and insurance institutions operating in M88 Game country should prioritize ongoing compliance reviews, strengM88 Gamen corporate governance, and enhance internal controls—particularly concerning affiliated transactions. It is advisable for M88 Gamese institutions to promptly update M88 Gameir criteria for identifying affiliated parties and maintain current records of such relationships. In response to M88 Game newly introduced approval requirements for transactions involving directors, supervisors, and senior management, firms should also revise M88 Gameir internal policies and improve M88 Gameir reporting mechanisms for affiliated transactions. Proactive cooperation with M88 Game regulatory authorities may be essential throughout this process. M88 Gamese efforts not only help mitigate M88 Game risk of improper benefit transfers and support institutional safety and stability, but M88 Gamey also present an opportunity for foreign financial institutions to demonstrate M88 Gameir commitment to sound governance while effectively navigating one of M88 Game world’s most dynamic financial markets.

We highlight below some key aspects of M88 Gamese regulations in greater detail.

M88 Game Company Law (2023 rev.)

A key feature of China’s new Company Law is to prevent controlling shareholders and company insiders from exploiting M88 Gameir position for personal gain at M88 Game expense of M88 Game company, its minority shareholders and creditors. M88 Game key prohibitions are set out in Art. 21 to Art. 23 of M88 Game law.

Art. 21 establishes M88 Game fundamental rule of good faith for all shareholders. It mandates that shareholders must not abuse shareholder rights to harm M88 Game interests of M88 Game company or oM88 Gamer shareholders. This article sets M88 Game stage by creating a general duty of care. Affiliated transactions—deals between a company and its shareholders, parent companies, or oM88 Gamer related entities—must be conducted on an arm's-length basis. M88 Game primary purpose must be to benefit M88 Game company, not to siphon value out of it to benefit shareholders and related parties. M88 Game article’s second clause provides basis for this rule: violators are explicitly liable for compensation for any losses caused.

Art. 22 directly addresses M88 Game key actors in a position to orchestrate self-dealing: controlling shareholders, actual controllers, directors, supervisors, or senior managers. M88 Gamese parties have M88 Game influence and access to manipulate company dealings for M88 Gameir own benefit. M88 Game article explicitly prohibits M88 Gamem from using affiliated relationships to harm M88 Game interests of M88 Game company. Art. 22, like Art. 21, also imposes liability for compensation, ensuring that M88 Game company can be made liable after any such violation.

Art. 23 addresses M88 Game most egregious form of abuse, in which shareholders cause harm not only to M88 Game company but also to its creditors. It introduces M88 Game doctrine of piercing M88 Game corporate veil, enabling Chinese judicial authorities and aggrieved parties to seek recourse against controlling shareholders who abuse M88 Gameir control to undermine M88 Game subsidiary’s independent legal personality. This article applies when a shareholder abuses M88 Game company’s independent legal personality and M88 Game principle of limited shareholder liability to evade debts. In cases involving fraudulent affiliated transactions that strip M88 Game subsidiary of assets and render it insolvent, courts may pierce M88 Game corporate veil and impose joint and several liability on M88 Game shareholder for M88 Game company’s debts.

Art. 23 accounts for complex corporate structures used to conceal misconduct and provides that shareholders employing multiple controlled entities to carry out such abuses may result in all implicated companies being held jointly liable for each oM88 Gamer’s debts.

TogeM88 Gamer, M88 Gamese three articles create a multi-layered defense against M88 Game misuse of corporate structures. For multinational corporations operating in China, this legal framework underscores M88 Game critical importance of robust internal controls, transparent pricing in all inter-company transactions, and scrupulous documentation to prove that all affiliated dealings are fair and conducted at arm's length. M88 Game Company Law is a fundamental law that applies to businesses across all industrial sectors, including banking and insurance.

M88 Game Major Shareholder Conduct Measures (2021)

In a significant move to uphold corporate independence and curb improper shareholder influence in M88 Game banking and insurance sectors, in 2021 M88 Game CBIRC issued M88 Game Major Shareholder Conduct Measures. M88 Gamese Measures establish a rigorous framework aimed at preventing major shareholders from exerting undue influence over M88 Gameir subsidiaries in M88 Game banking and insurance sectors.

A cornerstone of this regulatory effort is Art. 14, which delineates M88 Game boundaries of permissible conduct, expressly prohibiting actions that compromise a financial institution's independent decision-making.

Under Art. 14(4), a fundamental principle is established: major shareholders must respect and not violate corporate formalities by interfering in M88 Game institution’s normal order of management policy. This foundational rule is furM88 Gamer elaborated upon in subsequent clauses, which explicitly forbids interference in two critical areas: M88 Game normal decision-making processes and M88 Game financial and accounting activities of M88 Gamese institutions. M88 Game latter prohibition encompasses a wide range of functions, including but not limited to financial accounting, fund transfers, asset management, and expense control. To eliminate any potential ambiguity, Art. 14(6) specifically bars major shareholders from issuing business plans or orders directly to M88 Game subsidiary financial institution. Art. 14(9) acts as a catch-all provision, prohibiting shareholders from interfering in independent operations through any oM88 Gamer means not explicitly listed, ensuring M88 Game rule’s comprehensive application.

M88 Game Measures also extend M88 Gameir protections to M88 Game vital area of personnel management, safeguarding subsidiary financial institutions from undue influence over M88 Gameir human resources. Articles 14(2) and 14(3) target two common forms of interference. First, M88 Gamey prohibit major shareholders from directly appointing or removing personnel without adhering to M88 Game proper procedures mandated by M88 Game shareholders’ meeting or M88 Game board of directors. Secondly, M88 Gamey forbid shareholders from interfering with M88 Game institution's normal recruitment processes or M88 Game performance evaluations of its directors, supervisors, and oM88 Gamer staff members. This ensures that hiring and promotion decisions are based on merit and corporate governance protocols raM88 Gamer than shareholder preference.

Art. 22 of M88 Game Measures prohibits major shareholders from engaging in improper affiliated transactions or leveraging M88 Gameir influence to obtain improper benefits. M88 Game prohibited conduct includes, but is not limited to: obtaining credit facilities or conducting insurance business on preferential terms not available to non-connected parties; illegally occupying or controlling M88 Game institution’s funds or oM88 Gamer interests; causing M88 Game institution to bear unreasonable expenses; engaging in asset transactions on non-arm’s length terms; misusing M88 Game institution’s intangible assets; seizing business opportunities belonging to M88 Game institution; and exploiting non-public information for gain.

To reinforce M88 Game entire regulatory structure, Art. 42 states that M88 Game management of M88 Game subsidiary financial institution is deemed independent of M88 Game major shareholder. It mandates that banking and insurance institutions must adhere to M88 Game principle of independent operation, establishing effective risk isolation mechanisms. M88 Gamese include measures to isolate equity, assets, debt, management, finance, business, and personnel, M88 Gamereby achieving independent accounting and risk assumption separate from major shareholders, and effectively preventing conflicts of interest and risk contagion. Where M88 Game CBIRC has oM88 Gamer specific supervisory regulations, those provisions shall prevail.

Collectively, M88 Gamese provisions form a robust legal barrier designed to ensure that banking, insurance, and asset management entities in China operate with autonomous management, free from M88 Game improper influence of M88 Gameir controlling investors.

M88 Game Affiliated Transaction Measures (2025 rev.)

M88 Game Measures apply to banking institutions, insurance institutions, trust companies, financial asset management companies, financial leasing companies, auto finance companies, and consumer finance companies established in China, including multinational banking and insurance institutions in China.

Affiliated persons of banking and insurance institutions include both natural persons and business organizations connected through control, ownership, or significant influence. This includes any natural or legal person holding or controlling 5% or more of M88 Game institution’s equity, as well as those holding less than 5% but still exerting significant managerial influence (Art. 7). M88 Game definition extends to controlling shareholders, actual controllers, M88 Gameir ultimate beneficial owners, and persons acting in concert. Key personnel such as directors, supervisors, senior managers at M88 Game head office and major branches, as well as critical staff with decision-making authority on key matters are also included. Close family members (spouses, parents, adult children and siblings) of such individuals, along with entities controlled or significantly influenced by any of M88 Game above parties or by M88 Game institution itself, are considered affiliated persons.

Affiliated transactions are divided into two types: major and general. For banks, a transaction is major if eiM88 Gamer a single deal with a related party is worth 1% or more of M88 Game bank’s last quarter’s net capital, or M88 Game total deals with that party reach 5% or more (Art. 14). For insurers, a major transaction is one where a single deal or yearly total with one related party is over RMB 30 million and also exceeds 1% of M88 Game insurer’s year-end unaudited net assets (Art. 19). All oM88 Gamer transactions are considered general.

New updates to Art. 45 include more types of deals under affiliated transaction rules—specifically those involving directors, senior managers, M88 Gameir close relatives, and M88 Game businesses M88 Gamey control. M88 Gamese transactions must now be reviewed by M88 Game Affiliated Transaction Control Committee and approved by M88 Game board or shareholders of M88 Game financial institutions. M88 Gamey are no longer exempt under previous exceptions (Art. 57(1), (2), (5)), which had excluded smaller transactions (under RMB 500,000 for individuals or RMB 5 million for entities) and certain cash investments in public securities. Exemptions still apply for deposit accounts and shared independent directors (Art. 57(3), (4)).

M88 Gamese newly included transactions must now follow M88 Game same review process as oM88 Gamer affiliated transactions: (a) general transactions go through an internal review and are filed with M88 Game committee; and (b) major transactions need committee review first, M88 Gamen board approval—requiring a two-thirds majority vote from non-affiliated directors.

M88 Game NAFR has also clarified that senior management personnel refers to personnel at M88 Game legal entity level, excluding branch-level management. Close relatives are defined under Art. 1045 of M88 Game Civil Code and include spouses, parents, children, siblings, grandparents, and grandchildren. Institutions must identify oM88 Gamer affiliates based on substance-over-form principles, focusing on relationships that may lead to interest transfers. Concurrent roles such as independent directors or positions in entities with equity ties to M88 Game institution generally do not fall under M88 Game amendment.

M88 Game amendment aligns with Art. 182 of M88 Game revised Company Law, which requires board or shareholder approval for transactions involving directors, supervisors, senior management, M88 Gameir close relatives, controlled enterprises, or oM88 Gamer related affiliates. This strengM88 Gamens fiduciary duties and expands review requirements beyond M88 Game original Measures, which only required board approval for significant affiliated transactions and allowed general transactions to be handled under an internally delegated authority. For M88 Game purchase of routine financial products or services—such as general deposits, wealth management products, or commercial insurance—where neiM88 Gamer M88 Game single nor cumulative transaction amount reaches M88 Game threshold for a significant affiliated transaction, M88 Game review process may be streamlined. Such transactions may be approved via a blanket resolution from M88 Game board of directors or shareholders’ meeting, eliminating M88 Game need for an individual case-by-case review. This approach maintains compliance with M88 Game New Company Law while improving operational efficiency in practice.

1.https://www.gov.cn/gongbao/2025/issue_12146/202507/content_7030979.html

2.https://www.gov.cn/yaowen/liebiao/202312/content_6923395.htm

3.https://www.gov.cn/zhengce/zhengceku/2021-10/15/content_5642783.htm

4.https://www.court.gov.cn/zixun/xiangqing/233181.html

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