On 13 July 2026, China Merchants Securities Co., Ltd. (CMSC) released an updated “Terms of Reference of the Risk Management Committee under the Board of Directors,” aimed at elevating the firm’s risk-control and legal-compliance framework.
Key elements of the revised mandate are as follows:
1. Committee Structure • Membership will range between five and seven directors, including the company’s president. • All members—except the president—are elected by a majority of the full board. • A convener (chairman) is selected from among members to preside over committee work. • Tenure aligns with the board’s term, with eligibility for re-election upon expiry. Vacancies arising from director departures must be filled in line with the new rules.
2. Expanded Responsibilities • Formulating and recommending the company’s overall risk-management and legal-compliance objectives and policies. • Reviewing the effectiveness of internal risk-management systems, resource allocation, staff qualifications, and training budgets. • Evaluating risk exposures in major corporate decisions and proposing mitigation solutions. • Assessing regular risk and compliance reports, as well as economic-capital management plans. • Conducting special investigations into significant risk or compliance findings and overseeing management’s responses. • Handling additional matters mandated by regulators, the Articles of Association, or the board.
3. Meeting Protocols • The committee will meet at least quarterly. • A two-thirds quorum is required; resolutions pass with a simple majority of all members. • Meetings are held on-site by default, with remote participation permitted when necessary. • Members should attend in person; proxies are allowed once per member with written authorization. • Minutes must accurately capture deliberations and be archived for a minimum of ten years.
4. Operational Support • The company will provide necessary resources, including secretarial, administrative, and departmental support. • External advisers may be engaged at the company’s expense when specialized expertise is required.
5. Effective Date and Supersession The revised terms take effect upon board approval and supersede the previous charter (Zhao Zheng Fa [2025] No. 715) issued on 19 December 2025.
By formalizing these enhanced guidelines, CMSC seeks to fortify its governance architecture and ensure rigorous oversight of risk management and legal compliance across its operations.
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