On March 22, 2026, Xinhua released the revised Rules on Integrity in the Performance of Duties by Leaders of State-Owned Enterprises. The rules were systematically revised from the 2009 framework, revised by the CPC Central Committee on February 28, 2026, and issued on the same day by the General Office of the CPC Central Committee and the General Office of the State Council. The revision sharpens the rules on scope, conduct boundaries, supervision and accountability. In state-owned funds and investment M&A, the effect is not limited to personal integrity controls: it also reaches fund architecture, control-rights design, related-party transactions, cross-border operations and post-investment governance.
Five changes in the revision
Integrity rules move deeper into major business governance
The 2009 rules helped set integrity standards for SOEs and protect state-owned assets and national interests. The revision responds to continuing problems such as distorted performance incentives, using enterprise power for private gain, interest transfers and misappropriation of state-owned assets. It connects integrity requirements more directly with how SOE leaders exercise authority, make decisions and manage risk, and it places stronger emphasis on supervision of duty performance, use of power and self-discipline.
The revised rules also make the legal and institutional basis clearer, including links to party integrity rules, intra-party supervision rules and the Supervision Law. This puts integrity requirements inside SOE decision-making and major business governance, instead of treating them as separate personnel rules.
The covered entities and personnel are broader
The revised rules expressly cover wholly state-owned enterprises, state-controlled enterprises and enterprises under actual state control, including financial enterprises. They also refine the personnel scope to include party organization leadership, board members and management personnel managed by superior party organizations, and other senior managers covered by relevant management channels.
Through reference application, the rules also reach other personnel responsible for state-owned asset operation and management in wholly state-owned, state-owned, state-controlled and actually state-controlled enterprises and their branches, leaders of affiliated public institutions, and relevant responsible personnel in state-invested enterprises, including state-invested financial enterprises.
For transaction work, the inclusion of enterprises under actual state control matters. Applicability can no longer be assessed only by the legal form of the entity or a simple equity percentage. Shareholder agreements, articles of association, board resolutions and other arrangements may all be relevant when assessing whether state capital has actual control.
The structure shifts to positive duties plus a negative list
The revised rules combine affirmative duty standards with a clearer negative list covering abuse of authority, private gain, unauthorized profit-making activities, benefits for related persons, distorted performance targets, improper personnel selection and formalism or bureaucracy. The result is a more integrated review of decision process, responsibility chain and substantive compliance.
Distorted performance incentives become a specific compliance concern
Article 10 brings several business-expansion problems into the frame, including excessive leverage, deviation from core business, multi-layer structures used to avoid supervision, holding control without exercising control, minority investment without exercising rights, financing trade or sham transactions, and overseas expansion that violates compliance or integrity requirements.
This changes the lens for evaluating capital operations. Project size, landing speed or short-term results are not enough. The structure, governance effect and transaction authenticity must also withstand review.
Supervision and accountability become more concrete
The rules strengthen implementation, supervision and accountability. Party committee leadership, discipline inspection, investor supervision, external directors, audit and finance supervision all have clearer roles. SOEs are also expected to put integrity requirements into internal systems, articles of association and operating processes, especially for major decisions, related-party transactions, overseas business, and sensitive overseas posts, funds and projects.
Accountability tools are more specific, including clawback or deduction of remuneration incentives, termination or recovery of medium- and long-term incentive gains, treatment of improper benefits, economic compensation and restrictions on future appointments. The revision also allows no-fault treatment and clarification where appropriate, connecting implementation, supervision and responsibility handling more closely.
Impact on state-owned funds and investment M&A
When these changes are viewed in the context of state-owned funds and investment M&A, their impact is most visible in fund architecture, control-rights arrangements, exit mechanisms, related-party transactions and cross-border operations.
Fund architecture will face more look-through review
State-owned industrial funds and M&A funds often use fund-of-funds structures, sub-funds, project SPVs and multi-layer holdings for financing, risk isolation and transaction execution. Under the revised rules, those structures need a demonstrable commercial purpose when they overlap with leverage, channel arrangements, non-core investments or financing functions.
Supervision is also becoming more traceable. In fund structures, control chains, fund flows and responsibility allocation should be clear, identifiable and traceable. Transaction convenience alone is unlikely to be enough if the arrangement cannot explain its commercial necessity.
Control-rights design is no longer only a commercial issue
In M&A and mixed-ownership reform, nominal control without effective control, or minority investment without meaningful rights, can trigger integrity and governance concerns if the enterprise becomes unmanaged or uncontrolled. Review should therefore go beyond equity percentage, voting rights and board seats.
Budgets, financing, major contracts, financial authority, information rights, audit access and appointment rights all matter. After closing, investors should continue to assess whether nominal governance rights are being exercised in a way that supports information access, correction and loss control.
Exit mechanisms and related-party transactions need stronger procedure
Article 24 requires SOEs to establish related-party transaction management mechanisms, strengthen related-party identification, information collection, reporting and recusal arrangements, and manage pricing, fairness review and disclosure to prevent interest transfers.
Pre-agreed exit routes cannot replace procedure at the exit stage. If the exit counterparty is a group company, listed-company affiliate or other related party, the transaction still needs pricing support, fairness review, disclosure and recusal arrangements.
Internal transfers, related-party exits and designated transferee structures are often commercially useful, but they can become interest-transfer disputes if the procedural record is weak.
Outbound investment enters an integrated integrity and compliance review
Under Articles 25 and 26, overseas investment and cross-border M&A should be reviewed within an integrated integrity, compliance and supervision framework. Beyond project access, approvals, tax, foreign exchange and local law, SOEs should establish compliance departments or personnel appropriate to their scale, business scope and revenue, and build integrity and compliance systems for anti-commercial bribery, overseas business and other higher-risk operations.
For sensitive overseas positions, major funds and major projects, SOEs should also strengthen integrity-risk controls and, where required, use measures such as directly assigning overseas finance officers and rotating overseas personnel. Third-party fee arrangements, third-party payments, beneficial-ownership identification and disclosure, the purpose and substance of offshore SPVs, and overseas finance arrangements should not be treated only as matters of transaction convenience or market practice.
The issue is whether the arrangement is real, necessary, controllable and traceable, and whether it can withstand look-through review, process tracing and responsibility review. For SOE-related projects, that procedural and evidentiary record can directly affect whether the transaction can be advanced and defended.
Conclusion
The revised integrity rules add prohibitions and clarify how SOE leaders should perform duties, use power and face accountability. For state-owned fund operations and investment M&A, they affect structuring, control mechanisms, exits, related-party transactions and cross-border operations. Deals will increasingly need to show industrial logic, commercial value, necessity, traceable process records and clear responsibility boundaries. The official Q&A also points to continuing scrutiny of M&A and restructuring, property-right registration and trading, bidding and tendering, and other high-risk links.