Party and the board: Who is the boss?

Stroz Friedberg is a specialized risk management firm built to help clients solve the complex challenges prevalent in today’s digital, connected, and regulated business world

A growing number of Chinese state-owned enterprises (SOEs) have redrafted their by-laws to put Communist Party of China (CPC) organizations at the top of their corporate governance structures, according to news reports. Foreign investors and businesses have raised concerns about this development, noting, among other things, that it could undermine the authority of an SOE’s board of directors. In view of this development, foreign investors are advised to take into consideration the party organs when planning due diligence on a state firm.

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