In traditional corporate governance, managing a company is seen as an internal affair, with shareholders, boards, and management working within a structured framework of checks and balances. This model has operated for centuries, focusing on internal power dynamics. However, recent changes are shifting this paradigm, as highlighted at a recent event in Shenzhen on corporate governance and director liability under the new Company Law.
Since the 2020 Securities Law, regulatory penalties have become much stricter. The maximum fine for information disclosure violations has jumped from 600,000 yuan to 10 million yuan, and individual fines for directors and officers have risen from 300,000 yuan to 5 million yuan. In the first half of this year alone, the China Securities Regulatory Commission issued over 200 administrative penalties. Investor class-action lawsuits, once rare, are now frequent. In this environment, the old approach of "wait for a problem, hire a lawyer, pay a fine" is no longer viable. Companies now need both strong internal governance and external protection, which opens a new path for insurers to become deeply involved in the governance process.
The Shift in Corporate Governance Logic
Keynote speakers at the event described the current regulatory environment using three terms: rigid constraints, a closed-loop responsibility system, and internal control assurance. Rigid constraints are evident in higher penalties. The new Securities Law has raised the maximum fine for information disclosure violations to 10 million yuan. This is a clear institutional signal of regulatory intent. Revisions to governance rules in 2025 have created a comprehensive management system for directors and officers, including long-term mechanisms where pay is tied to performance and risk, as well as procedures for recovery of compensation.
A closed-loop responsibility system means that accountability is no longer just theoretical. Independent directors have clearly defined roles in decision-making, supervision, and advice. Audit committees now take on the core responsibilities of the former supervisory board. A three-dimensional accountability system combining administrative, criminal, and civil liability has been established, and public promises of liability do not expire when someone leaves a position. These elements form a tight net of responsibility.
Internal control assurance moves governance from a "paper compliance" exercise to something genuinely effective. This involves shifting internal controls from after-the-fact checks to being embedded in business processes, creating a closed loop of prevention, monitoring, and follow-up. A case study illustrated this: a company listed on the STAR Market was heavily fined for fraudulent issuance and false information disclosure. Thirteen individuals faced administrative penalties, and ten executives faced criminal charges, with the longest sentence being 7 years and 6 months. Even the bank that helped with the fraud was taken to court. These changes make it clear that for directors and officers, the risks are not just professional but also personal and financial. A high-quality listed company must rely on a solid, effective compliance structure, transparent information disclosure, and strong internal controls to achieve sustainable growth.
A Model of Governance: The Ping An Example
Good corporate governance is the foundation of a stable capital market. The standard performance of directors and officers is a key safeguard for the high-quality development of listed companies. Balancing business growth with compliance and managing various risks in their roles are core challenges for all listed companies. The governance practice of Ping An Insurance (Group) Company of China Ltd (HKEX: 2318) serves as a strong example. Key milestones in its governance evolution include: in 1994, it became the first Chinese insurer to hire an international accounting firm and produce an international actuarial report after introducing Morgan Stanley and Goldman Sachs as investors. In 2002, HSBC's investment helped build a comprehensive risk management and internal control system, alongside a world-leading financial shared services platform. Its 2004 Hong Kong listing led to a full review of its governance structure and the completion of a formal institutional framework.
After 38 years of exploration, Ping An has moved from "rough-and-tumble development" to a "system-first" approach, creating a unique path of using external expertise to drive governance upgrades. Ping An's governance is summarized in six dimensions: a sound development strategy, a robust governance structure, fair shareholder rights, transparent information disclosure, effective risk management, and win-win stakeholder relations. This framework aligns with G20/OECD corporate governance principles, Chinese financial regulatory requirements, and the listing rules of the Shanghai and Hong Kong stock exchanges, creating a governance standard that combines international perspective with local practice.
The internal logic of these six dimensions is noteworthy. The purpose of governance is not just governance itself, but to enable development. In Ping An's framework, development strategy is placed first. The governance structure, shareholder rights, and information disclosure form the institutional foundation for implementing the strategy. Risk management is the bottom-line safeguard, and stakeholders form the external ecosystem for value creation. This philosophy of "using governance to promote business, management, and development" transforms governance from a compliance burden into a source of competitive advantage.
Ping An's Innovative Service-Oriented D&O Insurance
Based on its own governance experience and the changing needs of clients after the new Securities Law, Ping An has launched a dedicated D&O insurance service brand called "Dong Ping An." This service aims to create a full-cycle service system covering prevention, assistance, and compensation to help improve corporate governance. D&O insurance is a liability policy that covers a company and its directors and officers. If a director or officer makes a decision in good faith that leads to a loss for investors, the insurer pays for the resulting legal costs and damages.
The logic behind "Dong Ping An" is to move from internal practice to empowering the entire industry. As of the first half of 2026, Ping An's D&O insurance had served over 600 A-share listed companies, processed over 350 claims, and paid out over 200 million yuan in compensation. This data shows that the product design is based on deep analysis of hundreds of clients and claims. Claims experience has been turned into risk identification capability, which is then translated into product design. Ping An is the only insurer in China with a dedicated team for D&O insurance, a sign that governance empowerment is moving from concept to institutionalization.
While traditional D&O insurance is like a "check that only cashes when trouble happens," the core innovation of "Dong Ping An" is to expand insurance from a single function of post-event compensation into a three-layer protection system embedded in the entire governance process: prevention, assistance, and compensation. Before an event, the insurer acts as a "risk identifier" and "capacity builder." This includes three services: information disclosure compliance review to help companies spot potential flaws before announcements; 24/7 intelligent public opinion monitoring to give companies early warning of market and regulatory developments; and scenario-based drills to help directors and officers understand their liability boundaries.
During an event, the insurer becomes a "crisis collaborator" and "professional support provider." This includes services for managing major public opinion crises and reputational repair, compliance consulting on major decisions with top experts, and assistance with regulatory investigations, including preparing materials and buying critical time. After an event, the insurer returns to its role as a "safety net provider," but with a new meaning. The service emphasizes proactive compensation, ensuring it is "paid properly" by monitoring client disclosure updates and responding immediately. It also ensures accuracy and smoothness by tracking major cases around the clock and using direct payment and pre-payment mechanisms. Finally, it aims for speed by simplifying paperwork and streamlining approval processes.
A case study illustrates the value of this service-oriented D&O insurance. A real estate company was investigated by the exchange due to a performance decline. The client was too busy to file a claim. Ping An, after monitoring the public announcement, proactively contacted the client and pre-paid all legal fees. In a crisis, the company was not alone; the insurer was the one who reached out first. This shows that external professional forces are now entering internal governance as "supplementary supervisors." The launch of "Dong Ping An" marks a shift for insurance from a traditional risk compensation tool to an infrastructure element deeply involved in corporate governance. It is no longer just about compensation after an event, but a full-cycle service loop that embeds professional power into every key link of governance.
The Triple Transformation of the Insurer's Role
Looking at the "Dong Ping An" service system, as the insurer becomes more embedded in the corporate governance ecosystem, its role has undergone a triple transformation from a passive risk taker to an active governance partner. The first transformation is from a "passive payer" to a "proactive intervener." Traditional insurance logic is to "wait for the client to file a claim." "Dong Ping An" overturns this. In the case example, Ping An proactively contacted the client after monitoring the public announcement of the investigation, even before the client itself. This proactive monitoring, outreach, and intervention turns the insurer from a passive payer into an active risk manager.
The second transformation is from a "single insurer" to a "service integrator." In the traditional model, the insurer's value is simply to pay a claim. "Dong Ping An" builds a service ecosystem: information disclosure review integrates legal expertise, public opinion monitoring integrates data technology, crisis response integrates public relations and consulting, and compliance consulting integrates top law firms and industry experts. Rather than just acting as a simple resource referral service, Ping An uses a dedicated team to create a coordinated mechanism with leading lawyers, consulting firms, and industry experts.
The third and most profound transformation is from a "risk taker" to a "governance participant." Traditional insurance logic is about pricing risk, collecting premiums, and paying claims. "Dong Ping An" takes a key step forward. It is not satisfied with simply "catching" risk at the end of the governance chain. Instead, it proactively enters the front and middle of the chain to help clients prevent risks from happening. By moving from risk reduction capability to feeding back into corporate governance, insurance is becoming part of the infrastructure for listed company governance. This triple transformation allows the insurer to play a role similar to a "governance rating agency." The underwriting process itself is a governance review, systematically examining a company's information disclosure compliance, internal control system, and historical risk events. In this sense, "Dong Ping An" is not just a product; it is a governance screening mechanism.
In the future, whether a company has D&O insurance, the coverage amount, and the risk prevention services it uses could become a reference for investors judging a company's governance level, much like ESG ratings today. From a broader perspective, as more institutions like Ping An enter the governance ecosystem, the overall governance level of Chinese listed companies could see a systemic improvement. An insurer is not a regulator, but it has flexibility and market incentives that regulators lack. An insurer is not an insider, but it understands a company's risk profile more deeply than any external observer. The rise of this "third role" is reshaping the governance landscape of China's capital market.
Conclusion: A New Path for Governance
Returning to the event's theme: "Stable governance, responsibility with support." The first part is the goal: stable operations and excellent governance. The second part is the path: responsibility must have a foundation, and risk must have a guarantee. The "support" in "responsibility with support" now has a richer meaning. It no longer just means "money to pay when things go wrong," but a complete support system: risk identification and capacity building before an event, crisis coordination and professional support during an event, and safety net guarantees and experience feedback after an event. The builder of this system is the insurer. The beneficiaries are listed companies and every director and officer who bears governance responsibility. The launch of "Dong Ping An" may be just one point in the history of Chinese corporate governance, but the direction it represents is clear. When insurance becomes an organic part of the governance ecosystem, every director and officer will have more confidence in their role, and every listed company's governance will be more robust. This is more than a slogan; it is a tangible governance vision, and insurers are becoming one of the most active partners in making it a reality.