- CCB’s Connected Transactions Reporting and Disclosure System Is Approved

On May 17, 2006, CCB (0939 HK) invited domestic and international specialists, representatives from domestic and international regulators including China Banking Regulatory Commission (CBRC) and Hong Kong Stock Exchange (HKSE) to check and examine the Connected Transactions Reporting and Disclosure System (Phase I), which was developed indigenously by CCB and has been put into trial operation. The system won a high recognition from the participating specialists and representatives, who claimed that the system was featured by practicability, technological advancement and scalability and would play an active role in standardizing the management of connected Transactions and ensuring the timely and accurate disclosure of information in CCB.

As the first Chinese commercial bank that was listed in Hong Kong Stock Exchange through shareholding restructuring, CCB pays great attention to the establishment and improvement of a corporate governance structure so as to comply with the laws of China and the regulatory rules of the listing locality. By the end of April, the Board of Directors passed the Resolution regarding Strengthening the Control over Connected Transactions, which requires the Connected Transactions Control Committee of the Board to organize the drafting of management rules governing connected Transactions and the development of the Connected Transactions Reporting and Disclosure System. The management of CCB gave top priority to the execution of the Board’s resolution. The governor of CCB headed a task force consisting of the elites of the bank. Based upon the communications with both domestic and international regulators and the recommendations of accounting and law firms both at home and abroad, CCB independently developed an Connected Transactions Reporting and Disclosure System and corresponding rules and regulations were also fomulated. Following the successful trial in Shanghai and Shenzhen, CCB started to promote the system across the whole bank.

This system is the first of its kind in China’s banking sector. This system, based upon the existing IT system, aims at building up an information platform controlling and managing connected Transactions so as to timely collect and sort out the connected Transactions taking place in all departments and branches, strengthen internal control management, and determine whether the connected Transactions need to be disclosed or exempted. On one hand, the system may help the bank to do business in compliance with the rules, prevent the possible moral risks related to connected Transactions, prevent and reduce potential economic loss or damages to the reputation, and build the confidence of investors in our bank. On the other hand, the system may provide information support for regulators and help the bank to establish effective communications and interactions with regulators.    

The development and application of the system was under the leadership of Song Fengming, Chairman of the Connected Transactions Control Committee and Xie Xiaoyan, a member of the Connected Transactions Control Committee and an independent director of the bank. The system is developed and applied in strict compliance with the rules promulgated by CBRC and regulators in the listing locality governing the connected Transactions control and disclosure. This is a reflection that the corporate governance structure of CCB is working effectively, particularly the supervisory role of independent directors. This also sets up a good example for CCB to strengthen risk and internal control management, foster the corporate culture of a modern commercial bank, standardize the information disclosure work, improve the transparency and build up a brand image accountable for shareholders, customers, employees and the society.