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Chapter I General Provisions
Article 1 In order to further improve the corporate governance of joint-stock stock commercial banks （referred to as commercial banks hereinafter）, promote sound operation and healthy development of the commercial banks and protect the legitimate rights of the depositors and shareholders, this guidance is hereby formulated in accordance with the Corporate Company Law of the People's Republic of China,of the People's Republic Law on the People's Bank of China of the People's Republic of China, Law of the People's Republic of China, Commercial banking Law of the People's Republic of China of the People's Republic of China and other laws and regulations.
Article 2 The term "corporate governance of the commercial banks" in this guidance refers to a the organizationalcorporate structure with the shareholders meeting, board of supervisors, board of trusteesdirectors and senior managersmanagement as the mainstay, andetc., an institutional arrangement guaranteeing independent operation and effective checks and balances among all parties, as well as the establishment of a scientific and highly efficient decision-making, encourage incentive and discipline mechanism.
Article 3 The following principles shall be abided by in establishing corporate governance of commercial banks: （1） Establish a completeImprove meeting system and decision-making process for shareholders meeting, board of directors, board of supervisors and senior management;（2） Clarify the rights and obligations forof the shareholders, directors, supervisors, and senior managers;（3） Establish and perfect strengthen the supervision mechanism with the board of supervisors as the core;（4） Establish a complete system for information reporting and disclosure, and;（5） Establish a rational remunerationpayment system and strengthen the encourage incentive mechanism.
Chapter 2 Shareholders and the Shareholders Meeting
Article 4 The shareholders of a commercial bank shall meet the qualification requirement for investment in financial institutions set by the People's Bank of China.
Article 5 A commercial bank shall protect the legitimate rights of its shareholders and treat all the shareholders in an equitable manner.When their rights are infringed upon, the shareholders shall have the right to demand suspensionthe stop of infringementsuch an act and compensation for the resultantted losses and damages in accordance with the laws, regulations and Articles of Associationcharters of commercial banks.
Article 6 A commercial bank shall stipulate in its regulations Articles of Association that the shareholders should shall support of the measures proposed by the board of directors to increase the ratioe of capital sufficiencyadequacy when it falls the rate ofthat rabelowtion capital sufficiency of the commercial bank is lower than the assizerequired level.
Article 7 A commercial bank shall stipulate in its regulations Articles of Association that shareholders that have borrowed money from the commercial bank should immediately repay loans mature and or immature loans when the bank faces possible liquidity difficulties.A commercial bank shall stipulate in its Articles of Association detailed standards for defining "liquidity difficulties" according to the Provisional Rules on the Prevention and Disposal of Financial Institutions' Payment Risks set by the People's Bank of China.
Article 8 A commercial bank shall not extend loans to its shareholders under a more advantageous situation than that set for other borrowers.The balance of a shareholder's loans from a commercial bank, with the loans of connected institutions included, shall not exceed 10% of the commercial bank's booknet value of capital.A commercial bank shall make stipulations in its Articles of Association that, when a shareholder fails to make repayment when its loans from the commercial bank are due, its voting right should be suspended.
Article 9 A commercial bank shall not accept its shares as subject matter underlyingof pledge. If a shareholder decides to use the shares of a commercial bank to guarantee for him or herself or others, he or she shall give prior notice to the board of directors. If the balance of a shareholder from a commercial bank has exceeded the audited booknet value of his or her equity heldshares for the precedinglast year and the shareholder has not provided deposit certificate or government bonds as pledge guarantee, he or sheit shall not be allowed to make pledge with his or her shares of the commercial bank.
Article 10 A commercial bank shall not provide financing guarantee for its shareholders or their connected institutions, except that the shareholders provide counterguarantee with deposit certificate or government bonds. "Financing guarantee" here refers to guarantee which a commercial bank provides to its shareholders or their connected institutions in financing activities.
Article 11 A shareholder shall not nominate candidates for director and supervisor at the same time to the shareholders meeting. If a directorperson nominatedee by a shareholder has been elected and taken the post of director （supervisor）, the shareholder shall not be allowed to cannot nominate supervisor （director） candidates before the completion of the term of this director （supervisor）…… If a supervisor nominee by a shareholder has taken the post of supervisor, the shareholder cannot nominate director candidates before the completion of the term of this supervisor.
Article 12 The board of directors of a commercial bank shall report in a timely manner to the shareholders meeting and the People's Bank of China the name lists of the top 10 shareholders, and the namelist of connected shareholders and other shareholders who could control the commercial bank when acting unanimously.
Article 13 Shareholders of a commercial bank shall nominate director and supervisor candidates in accordance with laws, regulations, rules and processprocedures provided by the regulations Articles of Association of the commercial bank.
Article 14 The controlling shareholder of a commercial bank has should fulfill its obligation of good faith bothhave good faithful obligation for to the commercial bank and other shareholders. The controlling shareholder shall exercise the investor's rights in strict accordance with laws, regulations and the rules Articles of Association of the commercial bank and shall not make use of its controlling status to gain profit or impair the interests of the commercial bank and other shareholders.
Article 15 The shareholders meeting of a commercial bank can be convened on aninclude annual or ad hoc meeting and special meetings basis.The board of directors of a commercial bank shall convene the annual meeting of the shareholders within 6 months after the ending of an accounting year. If the meeting is delayed for special situations, it shall be reported in good time to the People's Bank of China and the reasons for the delay shall be provided. The board of directors of a commercial bank shall convene special meetings of the shareholders according to laws, regulations and rules Articles of Association of the commercial bank. When the board of directors fails to perform its duty, which makes a commercial bank unable to make important decisions or unable to convene the shareholders meeting, the shareholders or the board of supervisors who individually or jointly hold more than 10% of the commercial bank's total voting shares may organize and convene the special meetings of shareholders by themselves, and they shall submit the written notice of convening the meeting to the People's Banks of China for record.The shareholders meeting of a commercial bank shall implement the "witness-by-lawyer" system and the lawyer shall provide legal opinions . The legal opinions should include the opinions on the legitimacy of the procedures of the shareholders meeting, qualification of the participating shareholders, contents of the resolution raised by the shareholders meeting, etc…… A commercial bank may independently determine the modes of convening shareholders meeting, and ensure that shareholders effectively exercise their legitimate rights.The board of directors of a commercial bank should shall submit documents such as minutes and resolutions of the shareholders meeting to the People's Bank of China for record.
Article 16 The Articles of Association Regulations of a commercial bank shall stipulate that the shareholders who individually or jointly hold more than 5% of the total shares with voting rights shall have the right to can propose a matterissues for review toto the shareholders meeting. The board of directors should shall submit these matters proposed by the shareholders proposed issues to the shareholders meeting for review. The Articles of AssociationRegulations of a commercial bank shall stipulate that its shareholders who individually or jointly hold more than 5% of the total voting shares with voting rights canshall have the right to presentopose bills of addressing inquiries to the shareholders meeting. The board of directors and the board of supervisors shall as required dispatch relevant directors, supervisors or senior managers to attend the shareholders meeting to answer the inquiries.according to the requirement of the shareholders.
Article 17 The board of directors of a commercial bank shall formulate a complete set of rules of on procedures for the shareholders meeting, which will be implemented after being reviewed and passed by the shareholders meeting.The rules of on procedures of the shareholders meeting shall include notice, and rules of procedures for the shareholders meeting, preparation of documents, convening, and voting formality, meeting minutes and its signature, withdrawal system for connected shareholders, etc……
Article 18 Besides reviewing the matters requiredprovided by relatedorporate laws, the following matters issues shall be coveredincluded for the reviewing by the annual meeting of theshareholders meeting.（1） AnnounceRelease the supervision opinions of the People's Bank of China for on the concerning commercial bank and the remedial measures implementation and correctiontaken by the commercial bank;（2） Report the evaluation of the directorsits members by the board of directors and the mutual evaluation results by the independent directors, and;（3） Report the evaluation of the supervisorsits members by the board of supervisors and the mutual evaluation results by the external supervisors.
Article 19 The board of directors shall arrange the agenda and topics in a fair and reasonable manner, so as to ensure full discussion in the shareholders meeting on every topic.
Article 20 If the contents of the resolution ofpassed by the shareholders meeting have violated laws, regulations and rules set by the People's Bank of China and other supervisingory authorities, they institutions, it shall be voluntarily corrected in good time or correctedmodified according to the opinions of the People's Bank of China.
Chapter III Directors and Board of Directors
Article 21 The board of directors shall be responsible to the shareholders meeting and it shall exercise its powers and duties in accordance with the Corporate Company Law of the People's Republic of China and the regulations Articles of Association of the commercial bank.
Article 22 Directors shall have the knowledge and experiences that are necessary for the performance of their power and duties and meet the qualification requirement set by the People's Bank of China. The qualification of the directors shall be examined and approved by the People's Bank of China.Besides those who are not allowed tocannot assume the post of director according to the Commercial Banking Law of the People's Republic of China and the Corporate Company Law of the People's Republic of China, the following people may notcannot either take the office of directors:（1） Those who have been removed from office by other commercial banks or institutions for violation of the good faith obligation;（2） Shareholders or employees of the shareholders whose balance of loans from this the concerning commercial bank has exceeded the audited booknet value of their equity heldshares for the precedinglast year （excluding the loans guaranteed by the pledge of certificate of deposit or government bonds）,; and（3） Individuals or employees of an enterprise that has faileds to repay its loans from to this commercial bank upon maturity.
Article 23 The board of directors shall formulate standard and transparent procedures for the election of its membersthe board, which will be implemented after the approval of by the shareholders meeting.
Article 24 The board of directors shall disclose detailed information on the director candidates to the shareholders one month before the convening of the shareholders meeting, so as to ensure the shareholders have enough knowledge about the candidates before casting their votesing.
Article 25 Directors shall participate in the qualification-training program organized by the People's Bank of China.
Article 26 Directors shall have the right, ,according to law, to know the operation and financial situations of all businesses of the commercial bank and exercise supervision on the performance of duties by other directors, supervisors and senior managers.Internal auditing departments of the commercial bank shall submit a complete auditing statement of the internal function departments and branch offices to the board of directors on a timely basis.
Article 27 Directors shall have good faith and exercise due diligencehard working obligations to the commercial bank and all shareholders. Directors shall seriously perform their duty and protect the interests of the commercial bank and all shareholders in accordance with the requirement set inof relevant laws, regulations, rules and the regulations Articles of Association of the commercial bank.
Article 28 In the case that a directorhimself is directly or indirectly connected with already existinged or planned contracts or transactions of the commercial bank, no matter whether such matter shall be approved by the board of directors under normal circumstances, he or she shall inform the board of directors and the board of supervisors immediately about the nature and degree of such connection.
Article 29 The ratio of senior managers in the board of directors shall be no less than one fourth 1/4 and no more than one third1/3 of the total number of the board of directors.
Article 30 A commercial bank shall establish the independent director system. Independent directors shall not have any relationship with the commercial bank or its major shareholders that may influence their independent judgment. While performing their duties, the independent directors shall especially take into consideration of the interests of the depositors and the medium and small shareholders. Independent directors shall be remunerated appropriately. The qualification, determinationelection procedure, rights and duties obligations and working conditions of the independent directors should meet requirements set by the People's Bank of China.
Article 31 During the performance of their duty, the independent directors shall immediately demand correction and report to the People's Bank of China of any violation of laws, regulations, rules and Articles of Associationregulations of the commercial bank by the board of directors, directorsits members, senior managers and the units or the staff andpersonnel of the commercial bank itself.
Article 32 The chairman of the board and the presidentgovernor of a commercial bank shall not be assumed by onethe same person.The chairmanship of the board of a commercial bank shall not be taken by the legal representative or key manager members of the leading group of the controlling shareholders.
Article 33 Directors and chairman of the board shall exercise their power and duties in accordance with laws, regulations, rules and the regulations Articles of Association of a commercial bank and shall not violate the rules ofon procedures and decision-making process of the commercial bank byto interferinge with the business and management activities conducted by the senior managementrs.
Article 34 Regular meetings of the board of directors shall be held at least four 4 times a year. The procedures forthe convening ofspecial board meetings shall be stipulated by the Articles of Associationregulations of a commercial bank. The board of directors shall invite members of the supervisorys board to participate theits meetings as oberservorsof the board of directors. The decisions made and, resolutions passed during the meetings and minutes ofof the board of directors and the minutes shall be submitted to the People's Bank of China for record within 10 days after the completion of the meetings.n 10 days after the completion of the meeting.
Article 35 The board of directors shall formulate a complete set of rules on procedures followed by the board for its meetings, including issuing notice, preparation of documents, convening and voting formalities, minutes of the meeting and its signature and rules of authorization by the board of directors, etc. Article 34 The board of directors shall formulate a complete set of rules of procedures of the board, including notice, preparation of documents, convening, voting, minutes and its signature and rules of authorization by the board of directors, etc……
Article 36 Members of the Board of Directors shall exercise their rights and duties through the board meeting, where each member is entitled to one vote. It shall be stipulated in a commercial bank's Articles of Association that the voting for critical matters, such as profit distribution plans, major investments, disposition of a significant portion of assets, appointment and dismissal of the members of the senior management, shall not be executed by means of communications, and the resolutions on these matters shall be adopted with over two thirds of the members of the Board of Directors in favor of them.
Article 37 When the Board of Directors decides to replace the bank President before the expiration of his or her term, a written explanation shall be presented to the Board of Supervisors on a timely basis.
Article 38 The Board of Directors, pursuant to the President's nomination, appoints or replaces vice president（s）, chief financial officer（s） and other members of the senior management. The Board of Directors shall not, at its own discretion, appoint or replace vice president（s）, financial officer（s） and other members of senior management without the President's nomination.
Article 39 The Board of Directors shall be subject to the monitoring of the Board of Supervisors, and shall not impede or interfere in such activities as investigation or auditing performed by the Board of Supervisors in line with its duties.
Article 40 The Board of Directors shall set up Related-Party Transaction Control Committee, Risk Management Committee, Remuneration Committee, Nominations Committee, and some other committee（s） to meet specific needs. All the Board committees shall be presided over by the members of the Board of Directors, and no less than three members of the Board of Directors shall be included in each committee.The Related-Party Transaction Control Committee and the Nominations Committee shall be chaired by the independent directors. Directors nominated by controllingmajority shareholders mayshall not serve inbe elected in both the either the Related-Party Transaction Control Committee orand the Nominations Committee.
Article 41 Major related-party transactions of a commercial bank shall be reviewed and approved by its Related-Party Transaction Control Committee. The transactions of critical importance shall not be executed unless otherwisebeing approved by the Board of Directors, and meanwhile they shall be reported to the Board of Supervisors for information.Those members of the Board of Directors that have substantial stake in a proposed issue being discussed by the Board of Directors shall not participate in the vote. Such a Board meeting shall not be held unless attended by over half of its members with no substantial stake in the discussed issue. The resolution to approve a related-party transaction shall not be adopted unless being passed by over half of directors who have no substantial stake involved.A commercial bank's Articles of Association shall define the standards for the major related-party transactions and the related-party transactions of critical importance respectively. The Board of Directors shall stipulate detailed rules regarding the review and approval process for the related-party transactions
Article 42 The Risk Management Committee monitors the behavior of the senior management in controlling risks of lending, market and operations, measures the risk exposures of the bank on a regular basis, evaluates the behavior of internal auditing department, and provides opinions on how to enhance the bank risk management and internal control.
Article 43 The Remuneration Committee proposes remuneration plans for the Board members, supervisors and senior managers, and administers the execution of the plans.
Article 44 The Nominations Committee sets the procedures and criteria for election of the Board members and senior managers, conducts preliminary qualification reviews, and makes recommendations to the Board of Directors.
Article 45 The Board of Directors shall set out the discussion procedures and define the duties and responsibilities of each Board committee. Each committee shall prepare its own annual work plan, and shall meet on regular basis.
Article 46 A commercial bank's Board of Directors shall, in compliance with relevant regulations of the People's Bank of China, set the minimum requirement and formalities for information disclosure, with aim to developing a well-functioned information disclosure system within the commercial bank.
Article 47 An ad hoc office shall be established under the Board of Directors to prepare for the meetings of shareholders, the Board of Directors and the Board committees, handle information disclosures, and run other day-to-day activities of the Board of Directors and the Board committees.The secretary of the Board of Directors of a commercial bank also acts as the director of the ad hoc office, who shall be nominated by the Nomination Committee and appointed by the Board of Directors, and shall meet the qualification requirements set by the People's Bank of China.
Chapter Four senior management
Article 48 The senior management consists of the president, vice president（s）, the chief finance officer（s） and some other personnel. The members of the senior management shall meet the professional qualification requirements set by the People's Bank of China.
Article 49 The members of the senior management shall follow the principles of integrity and credibility, and they shall carry out their defined duties and responsibilities in a prudent and diligent manner. The members of the senior management or their relatives shall not seek to compete with the commercial bank for business opportunities for their own or their relatives' interest, shall not accept any benefits that are related to the bank transactions, and shall not take part-time job in any other economic entities.
Article 50 The president, authorized by the Board of Directors, shall have the right to coordinate and administer a commercial bank's operations and management in compliance with laws, regulations, rules as well as the commercial bank's Articles of Association.The President shall perform the following duties:1. To propose to the Board of Directors on the appointment and dismissal of the vice president（s）, the chief finance officer（s）, and some other members of senior managementrial personnel.2. To appoint or dismiss the managers of a commercial bank's functional departments and branches.3. To propose business plans and investment strategies to the Board of Directors on behalf of the senior management, and administer the execution of the plans and strategies following approval of the Board of Directors.4. To authorize the members of the senior management, the managers of the functional departments and local branches to engage in business operations.5. To take immediate actions in response to emergencies such as a bank run, and promptly inform the People's Bank of China, the Board of Directors and the Board of Supervisors of the incident.6. To perform other duties as defined in laws, regulations, rules and the commercial bank's Articles of Association.
Article 51 The senior management shall, in line with a commercial bank's operational requirements, develop a sound internal control mechanism which is mainly composed of internal rules and regulations, operational risk control system and the credit approval system. The internal audit department of the commercial bank shall adopt a vertical management regime, and shall report directly to the President of the bank.The bank President may not serveshall not be allowed jo in the Credit Approval Committee, but mayshall retain the right to veto the credit authorization decisions adopted by the Credit Approval Committee.
Article 52 The senior management shall establish a reporting system, in which the senior management shall, on regular basis, provide the Board of Directors with full, timely and accurate information on all issues including the commercial bank's operational performance, important business contracts, financial situation, risk positions, the outlook for business development, etc.
Article 53 The senior management shall be subject to supervision by the Board of Supervisors, and shall, on regular basis, provide the Board of Supervisors with information concerning the commercial bank's operational performance, important business contracts, financial situation, risk positions, outlook for business development, etc. The senior management shall not impede or interfere in such activities as investigation or audit performed by the Board of Supervisors in line with its duties.
Article 54 The senior management shall establish and strengthen various meeting schemes, and formulate relevant procedures for these meetings. The minutes of the meetings shall be produced, and submitted to the Board of Supervisors for information.
Article 55 The senior management shall be free from any interference in its legitimate operational and management activities. The senior management mayshall have the right to request the Board of Supervisors to stop the members or the chairman of the Board of Directors from interfering in its operational and management activities, and mayshall report any such incident to the People's Bank of China.
Article 56 The Board of Directors shall ensure the relative stability of the senior management, and shall not change the management at discretion before the expiration of their terms. The Board of Directors shall report to the People's Bank of China when there is a necessity to change the management, and shall, in line with relevant rules, ask a qualification approval of the newly appointed senior managers by the People's Bank of China.Senior managers have the right to bring forward different opinions to the Board of Supervisors on Board of Directors' activities which violate the rules of approval and dismissal, and they shall report relevant information to the People's Bank of China.
Article 57 The Board of Directors shall promptly discuss and decide on any proposals submitted by the senior management for the necessary approval by the Board of Directors.
Chapter Five Supervisors and the Board of Supervisors
Article 58 The Board of Supervisors is the supervisory body of a commercial bank, and shall report to the shareholders' meeting. The Board of Supervisors shall perform the following duties:1. To monitor the performance of the Board of Directors and the senior management.2. To monitor the performance of the Board members, the Board chairman and members of the senior managementgerial personnel……3. 4. To request corrections by the Board members, the Board chairman and the members of the senior managementrial personnel whose behaviors undermine the interests of the commercial bank.5. To conduct auditing on the Board directors and the members of the senior managementrial personnel upon their leaving from the office.6. To examine and supervise the financial activities of the bank.7. To audit the operational decisions, the risk management and the internal control of the commercial bank, and provide guidance on the internal auditing activities of the commercial bank.8. To raise inquiries to the members or the chairman of the Board of Directors, or to the senior management.9. To perform other duties as provided in laws, regulations, rules or the commercial bank's Articles of Association.
Article 59 The Board of Supervisors shall consist of supervisors that represent employees of a commercial bank, external supervisors elected by the shareholders' meeting, as well as some other supervisors. At least two external supervisors shall be included in the Supervisory Board.
Article 60 A commercial bank shall establish an external supervisory scheme. The external supervisors shall not be related to the bank or to the major shareholders in a way that may affect their independent judgment. The external supervisors shall take into account of the general interests of the depositors and the commercial bank in performing their duties.The remuneration plan for the external supervisors shall be comparable to that for the independent supervisors.The decisions on the external supervisors' qualification requirement, election procedures, rights and obligations, and the working conditions shall comply with the relevant regulations of the People's Bank of China.
Article 61 Members of the Supervisory Board shall perform their supervisory duties in compliance with laws, regulations, rules and a commercial bank's Articles of Association.The qualification requirement, election procedures, rights and obligations set for the members of the Supervisory Board shall be comparable to the provisions offrom Article 22 througho Article 27 that are stipulated for the members of the Board of Directors.
Article 62 The Chairman of the Board of Supervisors shall work full time, and shall have professional knowledge and substantial experience in one of such areas as the accounting, auditing, finance or law.
Article 63 The Board of Supervisors shall establish the Nominations Committee to formulate procedures on and requirements for the election and appointment of its members. The Nominations Committee shall also conduct preliminary review on the qualifications of members of the Supervisory Board, and submit its recommendations to the Board of Supervisors.The Nominations Committee shall be chaired by an external supervisor.
Article 64 The Board of Supervisors shall establish an Audit Committee to develop audit plans for issues specified in Item 1, 2, 4, 5 and 6 of Article 57.The Audit Committee shallwill be chaired by an external supervisor.
Article 65 The Board of Supervisors shall engage a Certified Public Accountant （CPA） acknowledged by the People's Bank of China to audit the operational performance of a commercial bank for the previous accounting year. The audit report shall be completed before the annual shareholders' meeting and no later than April 30th of the year. The audit report shall be passed by the Board of Supervisors and signed by its Chairman, and shall be subsequently presented to the Board of Directors before it is presented to the annual shareholders' meeting for review and approval, The member（s） of the Board of Supervisors shall be held liable for failing to identify any unfair auditing statement provided by the CPA on the commercial bank.The commercial bank shall bear all the expenses incurred by the Board of Supervisors in performing its duties.
Article 66 The Board of Supervisors shall establish an administrative office as its executive body. The employees of this office shall have appropriate professional knowledge to ensure the fulfillment of the supervisory duties by the Board of Supervisors.
Article 67 A commercial bank shall ensure the normal operations of its Board of Supervisors by providing necessary office facilities and venues. The annual budget of the Board of Supervisors is subject to review and approval by the shareholders' meeting.
Article 68 The regular meeting of the Board of Supervisors shall be held at least four times a year. The procedures for the interim meetings of the Board of Supervisors shall be set out in a commercial bank's Articles of Association.The Board of Supervisors shall submit its decisions, resolutions and meeting minutes to the People's Bank of China for information.
Article 69 The Board of Supervisors shall establish comprehensive rules on meeting procedures, which cover such areas as issuance of meeting notice, the preparation of the meeting documents, meeting and voting formalities, preparation of minutes, and the signing of the minutes, etc.
Article 70 When the Board of Supervisors discovers that the Board of Directors and the senior management fail to abide by the prudent accounting principles, or fail to truthfully calculate the receivable interests, or fail to make adequate provisioning for bad loans, the former shall request an immediate correction.If the Board of Supervisors identifies any abnormal fluctuations in bank businesses, it shall raise inquiry to the Board of Directors and the senior management.
Article 71 The internal audit department of a commercial bank shall punctually submit to its Board of Supervisors the comprehensive results of the audit on each functional department and local branch offices.If the Board of Supervisors has any questions regarding the audit results provided by the internal audit department, it shall have the right to request an explanation by the President or by the internal audit department.
Article 72 In the course of executing its duties, the Board of Supervisors shall have the right to investigate into any personnel or agency affiliated with the commercial bank and the latter shall facilitate the investigations in cooperative manner.
Article 73 A commercial bank shall, in its regular report submitted to the People's Bank of China, incorporate the opinions of the Board of Supervisors on items including the asset quality, the asset/liability ratio, risk management, etc. The Board of Supervisors shall offer its opinions within 5 workdays after receiving the report of the senior management; otherwise it shall be counted as approval of the report.
Article 74 The Board of Directors shall send its dividend distribution plan to the Board of Supervisors for reference in advance. The Board of Supervisors shall offer its opinions on the plan within 5 workdays; otherwise it shall be counted as approval of the plan.
Article 75 Members of the Board of Supervisors shall attend the meetings of the Board of Directors. The attending supervisor shall have the right to makeother comments but has no voting power. The supervisors who attend the meetings of the Board of Directors shall report the discussion results to the Board of Supervisors.The Board of Supervisors, when deemed necessary, may designate its members to attend the meetings of the senior management.
Article 76 If the Board of Supervisors discovers that the Board of Directors, the senior management, or their members fail to comply with the laws, regulations, rules and the commercial bank's Articles of Association, the former shall recommend disciplinary actions against those accountable for the non-compliance, and shall issue a notice for correction within a time limit. The Board of Directors or the senior management shall promptly react by taking disciplinary actions or making corrections, and inform the Board of Supervisors of the results in written form.If the Board of Directors or the senior management refuses to take or delays the disciplinary actions or corrections, the Board of Supervisors shall report such an incident to both the People's Bank of China and the shareholders' meeting.
Chapter Six Incentive and Disciplinary Mechanism
Article 77 A commercial bank shall establish an incentive mechanism that links compensation to profitability of the bank and individual performance.
Article 78 Members of the Board of Directors, the Board of Supervisors and the senior management shall exercise due diligence in performing their respective duties. A commercial bank shall establish a fair and open criteria and procedure to evaluate their performance.
Article 79 The independent directors shall evaluate each other's performance. The performance of other directors shall be evaluated by the Board of Directors, and the evaluation results shall be reported to the general shareholders' meeting. The performance evaluation approaches for the independent directors and other directors shall also be applied respectively in evaluating the performance of the external supervisors and other members of the Board of Supervisors. The Remuneration Committee established under the Board of Directors shall decide on the evaluation, remuneration and incentive plans for the members of the senior management. The Board of Directors shall base its remuneration and incentive plan for each member of the senior management on his or her performance. The Board of Directors shall explain the performance evaluation criteria and results to the shareholders' meeting. Members of the Board of Directors, the Board of Supervisors and the senior management shall not participate in the processf determining their own performance evaluation and remuneration.
Article 80 Members of the Board of Directors, the Board of Supervisors and the senior management shall be held liable for compensation when their failure toof complying with laws, regulations, rules and the commercial bank's Articles of Association has incurred losses to the commercial bank and its shareholders.
Article 81 With mature conditions, a commercial bank, subject to the approval by the shareholders' meeting, may establish the profession liability insurance system for the members of the Board of Directors, the Board of Supervisors and the senior management.
Chapter Seven Supplementary Provisions
Article 82 This Guidance shall be applicable to all the joint stockstock commercial banks established in China. Each commercial banks
