Subsidiaries of COSCO establish their respective Boards of Directors in the light of Modern Enterprise System. The Boards of Directors are under the administration of directors sent by COSCO according to the Corporation Act. The Boards of Directors of different subsidiaries vary with each other according to the company nature.

i. Both directors and supervisors are supposed to receive special business training arranged by human resource sector before they assume their posts, and take systematic training organized by the Central Committee of the Communist Party of China and the SASAC of the State Council for high-level officials.

ii. Both directors and supervisors are supposed to receive special training periodically. The training mainly covers operation and management, laws and regulations, financing, enterprise strategy, investment management, director and supervisor business, etc. The training is targeted to improve high-level official’s capability to adapt to modern enterprise management.

Focusing on the enhancement of state-owned investors’ administration and supervision functions, COSCO carries out innovation for internal supervision mechanism and system to ensure state-owned investors’ efficient administration and supervision. The group’s companies in China are under the “Four in One” supervision system of disciplinary inspection, supervision, auditing and board of supervisors. COSCO has established the Procedures for Management of Decision Making Solution Design, Rules of Procedure for President Official Business Meeting, Procedure for Supervision and Management, and Internal Auditing Procedure, and carries out administration and supervision according to the national law and code and the Interim Measures for Management on Senior Executives of COSCO. COSCO has constituted the Regulation on Auditing for Economic Post Liability of Senior Executives of COSCO Group’s Wholly-owned and Holding Companies, to audit the economic liability of major senior company executives in their tenure, improve company operation through auditing suggestions, in a bid to realize internal supervision.

COSCO Group is under strict execution of the Approach on Measurement of Operating Performance of National Enterprises Heads. With the establishment and perfection of superincumbent operation performance measurement system, heads of COSCO and second-tier subsidiaries sign the Book on Liability of Operating Performance, analyze the assessment target layer by layer, form the mechanism of liability settlement and pressure conduction, and the incentive mechanism of relating operation performance and income allocation. These measures have enhanced the consciousness of profit and capital reward of second-tier subsidiaries of COSCO Group, excited the enthusiasm of both company heads and employees, provided mechanism guarantee for the group to deepen reform, strengthen management, and realize sustainable development, and therefore realized safe and healthy operation, value protection and value adding for state-owned assets.

To further strengthen management for executives, COSCO Group has released the Interim Measures on Management of COSCO Executives. The Measures provides evaluation principles for executives under administration of the group, including

1) be practical, realistic, objective and fair,
2) integrating assessment & evaluation and adoption & cultivation,
3) integrating comprehensive quality assessment and operation & management performance evaluation,
4) integrating nature evaluation and quantity evaluation.

According to the requirements of modern enterprise system, the group put forward the establishment of the executive evaluation and assessment system integrating comprehensive quality assessment and operation & management performance evaluation, to give evaluation for the operation and management performance of executive, considering the integration of enterprise sustainable development strategy, operation target and executive post liability. At the same time, the group has introduced into scientific management technologies such as measurement and appraisal for talent quality and measurement and appraisal for sustainable development indicator.

The group has established the Measures to Assess and Award Safety Operation Performance of COSCO Group’s Company Heads, to enhance internal supervision. The Measures demands subsidiaries to carry out safety assessment for the Regulations on Assessment of COSCO Group’s Current Safety Situation, and the group’s Safety Supervision Sector to offer integral assessment for subsidiaries according to subsidiaries’ daily assessment results and integrating their power and difficulty in safety management. The Safety Supervision Sector offers suggestions on awards and reports to the president official business meeting for approval. In light of the Book of Enterprise Heads Reliability on Operating Performance established by the Strategy Development Sector, the assessment for subsidiaries will be reflected in the form of award score. It is both incentive mechanism and internal supervision and assessment mechanism to encourage and supervise the liability sense of executives of subsidiaries on safety task, and boost the implementation of senior executives in safety management.