The new guidelines seek to improve corporate governance by limiting the power of executives to prevent power abuse or fraudulent transactions that have been prevalent in some listed companies.

It states that the highest authority in a listed company is the conference of shareholders, not the board chairman, and that any major decisions must be approved by the conference.

To prevent the control of companies by insiders, senior managers and employees' representatives must not account for more than half of the directors in the board.
Shareholders can not vote on transactions in which they are involved and only the conference of shareholders can appoint accounting firms. This is designed to prevent accounting frauds.

Board members, supervisors and senior executives were formerly banned from selling their shares during their tenure. Now they are allowed to sell them one year after the stocks are listed or six months after termination of service. In any given year, they can not sell more than 25 percent of the shares they have in the company.

China currently has around 1,300 listed companies. The poor performance and bad management of some firms are often blamed for the disappointing performance of the stock market, despite the dynamic national economy.