China Issues New Rules For Related-Party Transactions of FHCs

China’s central bank has issued new rules to further regulate related-party transactions of financial holding companies (FHCs) in an effort to curb risk and ensure stability in the financial sector after a number of major corporate scandals in the last decade.

The rules require them to set upper limits for related-party transactions, and listed eight scenarios involving prohibited acts to prevent “improper transfer of interest, risk concentration and contagion and regulatory arbitrage,” the People’s Bank of China (PBOC) said in a statement published Thursday.