FINANCIAL REGULATORY AUTHORITY Corporate Governance Code: 2025 Revision Effective Date: July 1, 2025 Document Reference: FRA-CGC-2025-01
The Financial Regulatory Authority hereby promulgates comprehensive revisions to the Corporate Governance Principles applicable to all entities whose securities are publicly traded on domestic exchanges. These amendments, developed through extensive consultation with institutional investors, corporate directors, legal scholars, and public interest advocates, reflect evolving expectations regarding board accountability, stakeholder engagement, and environmental, social, and governance (ESG) considerations in corporate decision-making.
Principle I: Board Composition and Independence. All listed companies must maintain boards of directors comprising a majority of independent directors, defined as individuals who possess no material financial, familial, or professional relationships with the company or its executive management that could reasonably compromise objective judgment. Additionally, at least one-third of board members must satisfy enhanced independence criteria, which exclude individuals who have served on the board for more than nine years or who have received compensation from the company beyond standard director fees within the preceding three fiscal years. Boards must establish procedures to assess independence annually and disclose any determinations regarding directors whose independence status is subject to discretionary judgment.
Principle II: Risk Oversight and Internal Controls. Boards bear ultimate responsibility for overseeing enterprise-wide risk management frameworks and ensuring the adequacy of internal control systems. This obligation necessitates the establishment of a board-level Risk Committee composed exclusively of independent directors with demonstrable expertise in risk assessment methodologies. The Risk Committee must meet quarterly at minimum and produce comprehensive reports evaluating the company's exposure to strategic, operational, financial, and reputational risks. Furthermore, companies must implement whistleblower protection mechanisms that provide confidential channels for employees to report concerns regarding potential violations of law, regulation, or company policy, with such mechanisms subject to periodic review by external auditors to verify their effectiveness and accessibility.
Principle III: Executive Compensation Alignment. Compensation structures for executive officers must demonstrably align with long-term value creation and incorporate meaningful performance metrics that extend beyond short-term financial results. At least 60% of executive compensation for senior leadership must be delivered in the form of equity awards that vest over periods of no less than three years and remain subject to clawback provisions in the event of financial restatements or conduct violations. Companies must disclose the ratios between CEO compensation and median employee compensation, along with detailed explanations of the methodologies employed to calculate these figures and the strategic rationale underlying compensation decisions.
Principle IV: Stakeholder Engagement and Sustainability. Directors must consider the interests of diverse stakeholders, including employees, customers, suppliers, and the communities in which the company operates, recognizing that sustainable value creation requires balancing the needs of multiple constituencies. Companies must publish annual sustainability reports adhering to internationally recognized reporting frameworks, detailing their environmental impact, labor practices, supply chain management, and contributions to societal well-being. These reports must be subject to independent assurance by qualified third-party providers.
Non-compliance with these revised principles may result in regulatory sanctions ranging from public censure to trading suspensions, depending on the severity and persistence of violations. The Authority will conduct periodic reviews to assess implementation effectiveness and may issue supplementary guidance as market conditions and societal expectations continue to evolve.