This month, the Chartered Governance Qualifying Programme replaces the International Qualifying Scheme as The Hong Kong Institute of Chartered Secretaries qualifying programme. CSj looks at the significance of this important milestone in the ongoing evolution of the Chartered Secretary and Chartered Governance Professional.
With effect from 1 January 2020, the Chartered Governance Qualifying Programme (CGQP), the new qualifying programme of The Hong Kong Institute of Chartered Secretaries (the Institute), goes live. This is one of the most critical elements of an ongoing strategy of the Institute, as well as the Institute’s international body – The Chartered Governance Institute – to refocus the profession on the core value that its members bring to the organisations they work for – excellence in governance. This article will look at the practical, as well as the strategic, implications of the CGQP in the context of the wider aims of the Institute’s rebranding and repositioning exercise.
Towards a new identity
The company secretary role has been changing and the rate of change has accelerated in recent years. The company secretary’s administrative duties are still very much part of the role and are as critical to good governance as they have always been, but the strategic side of the role – in particular providing governance advice to the board and overseeing the compliance and governance agenda of the organisations they work for – has expanded.
Hong Kong is a good place to see this transition in action, points out Edith Shih FCIS FCS(PE), International President, The Chartered Governance Institute, due to the rapid expansion of the stock market over the last two decades. ‘With the growth in the number of listed companies in Hong Kong, and the increasing complexity of compliance and governance work, our role has grown. More and more company secretaries have become responsible for handling governance issues across the board,’ she says.
She adds that the larger the companies practitioners work for, the more complex these governance issues tend to be. The area of transparency and corporate disclosure alone, for example, requires listed companies to have professional company secretaries able to navigate the hugely complex listing rule requirements for disclosable and connected transactions.
This transition has prompted the Institute, globally and locally, to give governance a more prominent place in the training and the identity of the profession. On 16 September 2019, The Chartered Governance Institute, formerly known as The Institute of Chartered Secretaries and Administrators, adopted its current name. Many of its divisions around the world, including Australia, Canada, Malaysia, New Zealand and the UK, have already adopted the term ‘governance’ as part of their local institute’s names. The term governance has also been incorporated into the professional designation of members. In September 2018, the Institute here in Hong Kong implemented the new Chartered Secretary and Chartered Governance Professional designation. The majority of Institute members in Hong Kong and the mainland of China (the Mainland) have already transitioned to this new dual designation.
Ms Shih welcomes these developments. She recounts that she has been in the situation where the word ‘secretary’ in her job title has been misunderstood as meaning ‘personal secretary’ or ‘typist’. ‘If you have the wrong job title to start with, you have to spend a lot of time correcting misconceptions before you can start telling people what you do. There is a Chinese saying: ‘挑냥페慤극邱攣페츰’ [to succeed at one’s work, one must have the right title]. I hope we can grow into our new identity as Chartered Governance Professionals and build up our capacities for getting the job done,’ she says.
She adds that the rebranding exercise will have benefits for the profession both internally and externally. Internally the rebranding will help to foster a better sense of the shared purpose and common values within the profession, while externally it will help to clarify the value that members of the profession bring to the organisations they serve. ‘Hopefully it will give our members a bit more gunpowder when they do their work and will psychologically help them to feel better equipped as governance professionals for the jobs they are doing. As governance professionals we are responsible for the many diverse aspects of ensuring that organisations benefit from good governance,’ she says.
Peter Greenwood FCIS FCS, International Council member of The Chartered Governance Institute and the Chairman of the Institute’s biennial Corporate Governance Conferences in Hong Kong, seconds this point. ‘If our individual members have the backing of a better understanding of what their profession actually does, and a sense that they belong to a well-recognised and respected organisation in the form of the Institute, that will set them on the path to be a more credible voice within the senior management of the organisations where they operate,’ he says.
He adds that the rebranding exercise should not just be a change of name however. ‘We have to backfill it with real substance and that process has started with the revised educational requirements for joining the profession,’ he says.
Training for the future
The ‘revised educational requirements’ Mr Greenwood refers to starts of course with the CGQP. Samantha Suen FCIS FCS(PE), the Institute’s Chief Executive, agrees that the launch of the CGQP gives substance to the profession’s rebranding exercise. ‘This is actually the backbone for the future of the profession,’ she says.
The CGQP updates and expands the syllabus of the International Qualifying Scheme (IQS), which had been the Institute’s qualifying programme since 2004. The profession recognises the need for a qualifying programme which better reflects the knowledge and skill set that members require for their expanded role. Since 2014, the Institute has been working with The Chartered Governance Institute to review the IQS syllabus and the CGQP syllabus reflects many of the findings of that review. Not only has the company secretary been moving towards a role as the overseer of organisations’ governance agendas, but the role has also become a central link that brings expertise together from diverse professionals in the company.
This has meant that the importance of having a detailed knowledge of the minutiae of financial accounting, human resources, administration and operational matters has diminished, while the importance of having a detailed knowledge of risk management, board dynamics and a broader understanding of the business environment and changing stakeholder expectations has increased. Advances in technology have been accelerating this trend. Company secretarial software, board portals and the many different automated compliance solutions now available on the market have made the administrative aspects of the company secretarial role a lot easier to handle, freeing up practitioners to give greater time and attention to the more strategic and advisory aspects of the role.
The CGQP syllabus reflects these changes (see ‘What’s new?’). For example, under the IQS there were two papers aimed at building students’ knowledge of corporate financial matters. Under the CGQP these have been combined into the Interpreting Financial and Accounting Information paper. ‘The IQS papers required students to do a lot of calculation, but our members are more likely to be working with accountants to do that part of the work. What is really critical is to have the ability to understand and interpret the financial information,’ Ms Suen points out.
The shift away from administrative and operational matters has enabled the CGQP to bring in new elements relating to governance, board dynamics and risk management without expanding the number of papers students are required to take – the qualifying examinations of CGQP have been consolidated into seven papers. The Corporate Governance paper under the IQS has been upgraded. An entirely new Risk Management paper has been added and a Boardroom Dynamics paper is offered as an elective – students can choose either this paper or the Hong Kong Taxation paper, depending on their area of focus.
These new areas are expected to become much more critical to members of the profession in the years ahead. ‘Even until recent times, risk management wouldn’t have been a core element of a corporate secretary’s skill set and was not part of their education requirements. Now it clearly is,’ says Mr Greenwood.
Similarly, as the board advisory component of the role increases in importance, practitioners will need to have a good sense of the relationships and personalities involved in the way organisations operate and, critically, in the way decisions are made by the board. Hence the addition of the Boardroom Dynamics paper to the CGQP syllabus. ‘The education of the profession now requires a much better understanding, not just of what constitutes good governance, but of the underlying drivers of good governance,’ Mr Greenwood says.
The CGQP is only the beginning of the journey that new recruits to the profession need to make. Respondents to this article emphasise the importance of continuing education – continuing professional development (CPD) is a mandatory requirement for members of the Institute, as a way for members to stay relevant in the fast-changing business environment. Ms Suen points out that, in addition to updating the syllabus of the qualifying programme, the Institute has been working on updating its Enhanced CPD programme (ECPD) to ensure that it offers training relevant to their changing roles.
The ECPD programme already has a strong focus on keeping members up to date with developing areas of compliance and governance. In addition, the programme cannot afford to neglect the practical administrative side of the company secretary role. ‘Even if you have passed the Corporate Secretaryship and Compliance paper of the CGQP, that doesn’t mean you can put what you have learned into practice. Our members need to know how to take minutes of meetings, as well as how to ensure compliance with the latest rules and legislation, so our Practical Company Secretarial Workshops will continue,’ Ms Suen says.
One new area of focus, however, will be soft skills. ‘The company secretary is at the centre of the organisation and soft skills are really crucial if you are responsible for bringing so many different people in the organisation together. Communication skills, for example, are essential to help our members advance their careers. They are particularly critical when it comes to advising the board – practitioners need to know when to speak and when to remain silent and smile,’ Ms Suen quips.
The future of the role
The process of change described in this article is still ongoing and Mr Greenwood emphasises that it will take time for the full benefits of the changes now being made to be felt. Nevertheless he believes the direction that the profession has taken will mean that members are much better placed to contribute to the difficult and challenging issues as they emerge in the organisations they serve. Updating the training, both initial and continuing, to make it relevant to the needs of the profession and to allow individuals to speak with authority and confidence on the topics that cross their desks is a crucial part of that. ‘I hope that will give individual members of the profession more confidence, because a lot of this comes down to confidence. You have to portray confidence and then you will be listened to. You cannot be listened to if people don’t understand what your job is or have any doubt of your mastering the job,’ he says.
Looking further ahead, how will the role continue to adapt to the changing business environment? This is difficult to predict, but some broad trends are already visible. There can be little doubt that the marketplace will increasingly need qualified people to handle the many different aspects of maintaining governance standards, but this task is already a collective effort of a number of different players. ‘As governance professionals, we are part of a practice that is everywhere,’ points out Ms Suen. ‘Governance is relevant to many different jobs. If you are an engineer, acquiring our qualification will help you to do your job better. It will also help individuals move up to a director’s position whatever their professional background.’
As the role changes, the Institute here in Hong Kong and globally is also changing. The goal of The Chartered Governance Institute is to be the global qualifying body for anyone involved in governance – including company secretaries, directors, compliance professionals, lawyers, accountants and risk managers. This is still a work in progress, but Ms Shih points to the recently launched e-community (available from The Chartered Governance Institute website: www.cgiglobal.org) as an important step forward on this journey.
‘Members from all of our divisions around the world can dial log into the e-community to learn about the latest developments relevant to our profession. It provides a central webpage where people can go to access our latest thought leadership papers and community news, or to link up with fellow professionals globally,’ she says.
With this and the other developments discussed above, Ms Shih believes that the profession has reached a critical moment in its evolution. ‘Going forward, equipped with the new name and qualification, I think we are ready to conquer the world. Anyone who is interested in becoming a governance professional should contact the Institute,’ she says.
Kieran Colvert, Editor, CSj
SIDEBAR: WHAT’s NEW