Four board secretaries share their work experience in diverse areas such as cross-border compliance, capital market operations, information disclosure and communication with foreign institutional investors, as well as their views on the changing perceptions of board secretaries in the Mainland.
Sui Li, Board Secretary, Guangzhou Automobile Group Co Ltd
Guangzhou Automobile Group Co Ltd (GAC Group) is listed on the Shanghai Stock Exchange (Stock Code: 601238) and the Hong Kong Stock Exchange (Hong Kong Stock Code: 2238). It is mainly engaged in the design and manufacture of vehicles and parts, automobile sales and logistics, automobile finance, insurance and other related services. Among all large, state-controlled automobile groups in the Mainland, GAC Group was the first company to achieve dual A+H share listings. In addition to her role as Board Secretary of GAC Group, Ms Sui is also the head of the group’s financial business division and chairman of GAC Capital (GAC Capital) Co Ltd, a subsidiary of GAC Group.
Differences in the laws, legal systems and investor composition in Hong Kong and the Mainland have led to differences in the roles of the board and company secretaries, says Ms Sui. Working for an A+H listed company, she needs to switch between these roles, and take into account the differences in rules and markets in Hong Kong and the Mainland from time to time. Listed companies need to coordinate and take into account the differences in rules and markets between the two places, and find a balance that meets the needs and interests of all parties. She says for example, H share investors tend to be specialised, institutionalised and have recognisable investment strategies, so she carries out targeted communication with shareholders and potential institutional investors in Hong Kong and overseas at the company’s results roadshows, presenting data on its business operations and financial conditions, helping investors learn about the company’s long-term investment value.
‘The main responsibilities of a company secretary in Hong Kong are looking after corporate governance and regulatory compliance, while the work of a board secretary in the Mainland can have a much wider scope. Overseeing a company’s compliance work is only one aspect of the work of board secretaries – they also shoulder extremely challenging tasks such as internal and external communication, investor relations, media communications, capital market operations, share price management and senior management oversight,’ she says.
She adds, for example, that many board secretaries in the Mainland are also responsible for capital market operations. Ms Sui also serves as the chairman of GAC Capital and seeks to help modernise the auto industry. Part of her responsibility is to oversee the sourcing of high-quality resources upstream and downstream in the supply chain, and to work on mergers and acquisitions to support the development of the group’s main business. All these tasks require a responsible, pioneering and innovative mindset.
During the COVID-19 pandemic, the corporate governance, information disclosure, investor relations, capital markets operations and other tasks of the board secretary have been carried out as usual. However, the pandemic has led to travel restrictions in many places, affecting the movement of people across borders. Ms Sui suggests that companies adopt both online and offline communication strategies, and carry out daily communication with investors through emails, telephone and video calls and web conferences. ‘At the same time, you need to factor in additional staff resources when you are setting up a work team. In addition to the main team members, there should be backup members. Overseas staffing of your professional teams is also important and should be taken into consideration,’ she says.
Looking ahead, due to the effects of the pandemic, competition in the auto industry is more intense, with many mergers and reorganisations of small and medium-sized enterprises. Ms Sui said practitioners need to strengthen communication with investors and industry peers in their work, and look for more investment opportunities in the industry that are conducive to the company’s development.
With the opening of the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connects, together with the inclusion of A share companies in indexes such as MSCI and S&P Dow Jones, the Mainland’s securities market, as well as its governance practices, are gradually integrating into the international market. ‘Due to differences in politics, economy, law and culture, there are inevitably differences in regulatory systems and concepts at home and abroad. As board secretaries of companies with multiple listings, we should fully understand the local politics, laws and culture of our listing jurisdictions. Only by actively adapting to new situations, and adjusting one’s role from time to time, can we ensure compliance,’ she says.
Xie Jilong, Board Secretary, CRRC Corporation Ltd
CRRC Corporation Ltd is engaged in the research, development and manufacturing of rail transit equipment. It is a large state-owned enterprise listed on the Hong Kong Stock Exchange (Hong Kong Stock Code: 1766) and Shanghai Stock Exchange (Stock Code: 601766). Xie Jilong FCIS FCS is the board secretary of CRRC Corporation Ltd.
‘The core value of corporate governance is to properly handle the sometimes conflicting interests of shareholders and managers, which arise from the separation of ownership and management,’ Mr Xie says. He believes that the board secretary of an A+H share company should be able to confidently keep close contact with regulatory bodies in Hong Kong and the Mainland and also have active communication with them. When major problems occur, all parties should take action once a preliminary agreement has been reached.
‘First of all, it is necessary to work out with lawyers a solution suitable to the company, and then communicate with regulators in Hong Kong and the Mainland to see if they agree with the company’s view. Secondly, regulators in both Hong Kong and the Mainland tend to share similar regulatory opinions. The company should bear in mind that both regulatory bodies communicate with each other on major issues relating to listed companies. Before the company talks with regulators, it should identify which body has a greater business impact on the company, or keeps a closer eye on the company, and then communicate with that regulator as a priority. In this way, the chances of being approved by both regulators will be largely improved,’ Mr Xie says.
He also shares that the pandemic has presented challenges to the company’s output and operations – preventing the spread of the pandemic and the resumption of production have become top priorities. Against that backdrop, the most important work of the board secretary is still, however, to ensure that the company’s operation as an A+H listed company complies with the regulatory rules in Shanghai and Hong Kong.
Recently, as a result of the pandemic, the capital market has been more volatile, affecting the company’s stock price. During this period, the board secretary’s role in market value management has become more important than ever. ‘As part of the company’s executive, and as the bridge between the company and the capital market, I provide advice on the company’s operations and ensure that the company’s operations are in compliance with relevant laws and regulations. I also work on information disclosure and investor communications,’ Mr Xie says.
He believes that it is very important for listed companies in the Mainland to hire a professional and competent board secretary. After the promulgation and implementation of the Mainland’s new Securities Law and its new registration system, the importance of information disclosure and compliance management has increased significantly. ‘As the link between the company and the capital market, the board secretary must not only master relevant laws and regulatory knowledge such as the Company Law, Securities Law and Listing Rules, but must also be familiar with the company’s articles of association and information disclosure rules, as well as those relating to financial accounting and company management. Only in this way can the board secretary ensure compliance with relevant laws and regulations,’ Mr Xie says.
In addition, being in a complex web of relationships between regulators, shareholders, board of directors and senior management, board secretaries should not only uphold legal and regulatory principles, but also find a balance in the complex relationship. ‘The board secretary is the fulcrum that holds various relationships in balance,’ he says.
Mr Xie has been very supportive of the work of the Institute for some time. ‘In recent years, the Institute and the Shanghai Stock Exchange have organised a number of training sessions for A+H listed companies. The Institute has also provided professional materials, such as guidelines on the practices of inside information disclosures of A+H companies, which has improved the governance expertise of members,’ he says.
As domestic and foreign capital markets continue to evolve, Mr Xie believes that the demand for board secretaries will continue to increase. ‘I expect that the board secretary will become more professionalised in the future; there is a lot of space for future development,’ he says.
Zhu Xu, Board Secretary, China Vanke Co Ltd
China Vanke Co Ltd (Vanke) is listed on the Shenzhen Stock Exchange (Stock Code: 000002) and the Hong Kong Stock Exchange (Hong Kong Stock Code: 2202). It is one of the largest real estate developers in the Mainland. Its business includes residential development, property management, commercial real estate, logistics, tourism and education.
The responsibilities of a board secretary, says Zhu Xu ACIS ACS, who is both the Board Secretary and a Partner of Vanke, focus on the company’s governance and compliance work, including information disclosure, board governance, internal risk control, shareholder and investor communications. However, since each company is unique, it is necessary to establish a system in order to promote the efficient flow of information, optimise decision-making processes at all levels and ensure that company decision-makers have all of the information they need.
‘Vanke’s shareholders are diverse, so as the board secretary, I must communicate with the directors on plans in advance,’ she says. For companies listed in Hong Kong and the Mainland, cross-border compliance is also complicated and needs to be carried out carefully. A team familiar with regulations in the two places is very valuable to the company. The board secretary also plays an important role in investor relations, assisting the board of directors in answering difficult questions raised by investors. ‘Vanke’s investors come from different countries. The board secretary needs to be proficient in Chinese and English, and understand the mindsets of different investors,’ she says.
Finding easier access to capital, which is the lifeblood of the company, also tests the skills of the board secretary. Ms Zhu emphasises that the board secretary needs to have a wide range of knowledge and skills. In particular, board secretaries should have strong knowledge in fields such as finance, accounting, law and human resources – especially when the company is preparing to go public. ‘In the early stage of listing, the board secretary needs to make preliminary preparations within the company and communicate with the regulatory authorities,’ she says.
She also shares that the COVID-19 pandemic has presented many challenges for the company’s operations. ‘We insist on regularly publishing reports, using co-editing software to improve our work efficiency, and switching our regular communications with investors to live video broadcasts with Chinese and English subtitles,’ she says.
She points out that the challenge board secretaries will face in the future is how to make investors better understand the company’s strategy and long-term goals. ‘The board secretary needs to organise more activities for listed companies designed to ensure that investors see the company’s business and services with their own eyes, so they can truly understand how the company operates,’ Ms Zhu says.
Dr Jin Xiaobin, former Board Secretary, Haitong Securities Co Ltd
Haitong Securities Co Ltd is listed on the Shanghai Stock Exchange (Stock Code: 600837) and the Hong Kong Stock Exchange (Hong Kong Stock Code: 6837). It is one of the first securities companies established in the Mainland that engages in proprietary trading of securities, as well as the opening, verification, selling and investment consulting of securities accounts. Since joining the company in 1998, Dr Jin Xiaobin FCIS FCS has held various positions in the company and its subsidiaries.
Dr Jin summarises his duties as a board secretary. He says, in addition to the responsibilities stipulated by the company’s articles of association and regulatory bodies, the board secretary should perform five major duties – acting as the official spokesperson of the company, contact person of the regulatory department, coordinator between shareholders and company management, participant of the company’s capital operation and executor of the company’s compliance work. Board secretaries, he points out, play a pivotal role in maintaining the company’s brand image, innovation and value.
Dr Jin says, as the board secretary of a company listed in Hong Kong and the Mainland, he has to make sure the company complies with various regulations of Hong Kong and Mainland regulatory bodies, such as investor relations, internal risk management and environmental, social and governance (ESG) requirements. Good governance requires board secretaries to treat investors in both places equally, ensure the consistency of information disclosure and respond to questions raised by different investors.
For example, the differences in the composition of investors in Hong Kong and the Mainland may lead to different market reactions. Hong Kong investors are mainly professional institutional investors, while investors from the Mainland are mainly independent investors. ‘Independent investors and institutional investors may have different information needs. For example, when a hedge fund discovers that a company is encountering emergencies, it may start hedging, so what we need to do is to filter out false information in the market as soon as possible to reduce losses,’ he says.
Dr Jin confirms that the current pandemic has created challenges for the work of board secretaries. Industry revenue and profits fluctuate greatly and the market is unstable. Thus, communication with investors has become especially important. ‘The board secretary can communicate with investors online to deliver positive energy and strengthen investor confidence. When the company’s stock price fluctuates, the board secretary can assist the company to increase its holdings or repurchase stocks, or launch an equity incentive plan,’ he says.
Dr Jin believes that the future development of board secretary practice in the Mainland will follow a trend similar to that of Hong Kong. ‘In the future, board secretaries may gain the sense of belonging to a profession like lawyers and accountants, rather than just having allegiance to and serving a single company,’ he says. He also points out that the Institute has played an indispensable role in developing board secretary practice – promoting better awareness of the regulatory regime relevant to listed companies in the Mainland, improving board secretaries’ ability to perform their professional duties, and making listed companies pay more attention to information disclosure and maintaining the company’s brand image.
‘As a board secretary, the most important thing is to be honest and trustworthy. Do not tell lies and do not make false accounts. In terms of professional ability, you need to be familiar with the company’s business, costs and income areas, in order to communicate with investors and create value,’ Dr Jin says.
疫情之下，董秘的工作方向没有改变，公司治理、信息披露、投资者关系管理、资本运作等各项工作也是正常地开展，但疫情导致很多地方采取了交通管控或隔离措施，影响人员的到位，尤其是跨境人员流动。眭女士建议公司“线上”配合“线下”，如通过邮件、电话、视频、网络会议等方式与投资者展开日常沟通。 “同时，在选用工作团队时要留有余量，除了主要团队成员，还要有备用成员；此外专业团队在海外的人员配备也是一个重要的考量。 ”
金博士说，作为两地上市公司董秘，公司得遵守香港和内地监管机构各项规定，如投资者关系、内部风险管理和环境、 社会和治理 (ESG) 报告等要求。他分享，在公司治理中，好的董秘需平等对待两地投资者，确保消息披露的一致性，同时针对不同投资者提出的问题做出答复。