Kenneth Jiang FCG FCS(PE), Chief Representative, Beijing Representative Office of The Hong Kong Chartered Governance Institute, reviews the work of the Institute in the Mainland in fiscal 2021, and looks at what the future will hold for governance professionals in Hong Kong and the Mainland.
Despite the fact that personnel exchanges between Hong Kong and Mainland China have been hindered by the Covid-19 pandemic, The Hong Kong Chartered Governance Institute (the Institute) has remained committed to its mission in the Mainland. In fiscal 2021 (1 July 2020 to 30 June 2021), the Institute was able to overcome the challenges and continue to provide professional development services to members, students and listed companies, helping to ensure compliance during the pandemic. The Institute also continued to promote a new era of professionalised governance in the Mainland.
Minimising negative impacts
The Institute responded quickly to the new normal of social distancing measures and group gathering controls under the pandemic, and explored new ways to provide professional services that are timely, convenient and high quality to its members, students and Affiliated Persons (APs).
For APs, the Institute has held webinars in both online and hybrid (a mixture of online and onsite) formats, based on its experience of running its Enhanced Continuous Professional Development (ECPD) services in Hong Kong. In order to improve the effectiveness of online webinars, the Institute introduced online voting systems, interactive question and answer sessions, and online and offline workshops. Innovative training methods, such as role play and remote access to live webinars, have attracted active participation by members.
In addition, the Institute has developed an online ECPD system that makes recorded webinars available to members. This proved invaluable during the pandemic as Hong Kong webinar speakers have been unable to go the Mainland, and it has also provided a safe and convenient training resource for members. The Institute has also provided online communication platforms for examination briefings and experience sharing.
In fiscal 2021, the Institute held eight ECPD seminars in the Mainland, including five online webinars on A+H share board secretary practice and intermediate-level corporate governance training, as well as three onsite seminars, two of which were specifically designed for directors and supervisors, and one of which was specifically designed for board secretaries.
In addition to listing regulation updates, and updates on information disclosure and compliance practices, our ECPD training also covered the impact of the Mainland’s new securities law on company directors, supervisors and overseas investors in accordance with market demand. Our ECPD training also focused on the potential impacts of the latest proposed changes to Hong Kong’s Corporate Governance Code and Listing Rules on directors, independent directors, executives and board secretaries, to guide them through their due diligence and capital operations work.
Since the implementation of the AP programme, the Institute has held a total of 57 seminars, attended by more than 7,800 participants, including board secretaries, directors, supervisors, relevant board personnel and other senior management.
At present, the Institute’s APs consist of board secretaries, directors, supervisors and equivalent governance practitioners of overseas listed companies. As of 30 June 2021, the Institute had 168 registered APs, a year-on-year decrease of 3%, mainly due to the impact of the pandemic and fact that a number of our APs changed their status to membership.
As of 30 June 2021, 38% of the APs are from H share companies, 29% are from A+H share companies, 18% are from red chip companies, 8% are from A share companies, and 7% are from to-be-listed companies. Board secretaries accounted for 64% of our APs, directors and senior executives accounted for 23%, and other governance practitioners accounted for 13%.
Although the challenges brought by the pandemic and the international geopolitical uncertainties are still ongoing, the number of students in the Mainland increased slightly compared with the same period last year. As of 30 June 2021, the Institute had 299 registered students. Due to successful pandemic controls and online examinations, as well as members graduating from the Shanghai and Shenzhen corporate governance training courses, the number of our Mainland members increased by 19%. As of 30 June 2021, the Institute had 126 members in the Mainland.
In order to meet the urgent need for high-quality corporate governance professionals in the Mainland, and to assist people who are interested in obtaining the Chartered Secretary and Chartered Governance Professional (CS/CGP) qualification, the Institute established accreditation of the Postgraduate Programme in Corporate Governance (PGPCG), offered by the Hong Kong Metropolitan University (formerly the Open University of Hong Kong), in Shanghai (since 2016) and in Shenzhen (since 2019). Graduates of the PGPCG programme can apply for full exemption from the Institute’s professional examination – the Chartered Governance Qualifying Programme (CGQP). After gaining three to six years of relevant work experience, they can apply for the Institute’s CS/CGP qualification. In September 2020, 50 students enrolled in the PGPCG in the Mainland.
In order to further strengthen communication and experience sharing among board secretaries in the Mainland, the Institute’s five Regional Board Secretary Panels (RBSPs) – located in Beijing, Shanghai, Shenzhen, Guangzhou and the Southwest (including Chongqing and Chengdu) – meet regularly to conduct discussions and exchanges on relevant issues every year.
The Institute held Regional Board Secretaries Roundtables in April 2021 in Chengdu, Shenzhen, Beijing and Shanghai to discuss the enhanced disciplinary powers and sanctions of The Stock Exchange of Hong Kong Ltd (the Exchange). More than 103 directors, company secretaries, representatives of senior management and professional institutions, regulatory agencies, Institute members, joint members and students from all over the country attended these meetings. The RBSPs plan to change their names to the Board Secretaries and Governance Professionals Panel (Regional Panels) in January 2022. The Regional Panels aim to attract a wide group of governance professionals and empower them to carry out activities independently.
A three-year strategic plan
To promote the professionalisation of governance, and in response to the challenges posed by the pandemic, the Institute formulated its 2021–2023 strategic plan in October 2020. The three-year strategic plan puts forward several goals, including to:
- become a leading international professional governance institution and establish the governance profession in the Mainland by 2030
- establish and improve an international governance professional talent training system to meet the needs of the Mainland and Hong Kong for high-quality international governance professionals
- use the AP programme as a platform for high-quality professional training, to promote the Institute’s professional qualification, and to recruit directors, supervisors and governance-related personnel to join as APs
- expand the enrollment of students and increase the graduation rate of students, promote the rapid growth of the number of members in the Mainland, and
- expand the scope of practice and professional influence of the Institute’s members, expand the foundation of professional development and other development strategies to open a new era of development in the Mainland.
The Institute established its Mainland China Technical Consultation Panel (MCTCP) in 2017 to resolve problems encountered by Mainland companies in Hong Kong, to address regulatory differences between the two places and to promote best international governance practices among A share companies.
In recent years, as global regulators have invested more governance responsibilities in company secretaries and board secretaries, they have faced new challenges and risks in their work. To give greater support to board secretaries, directors and supervisors in their work, the Institute has established two subcommittees under its MCTCP, namely, the Board Secretaries Committee, and the Directors and Supervisors Committee.
At present, the MCTCP and its two new subcommittees are working on practical guidelines for A+H share companies on insider information practice, as well as overseas listed independent directors’ appointment requirements. It is expected that the work will be released in the near future.
The future for governance professionals
After two major governance incidents – the Enron Incident in 2001 and the global financial crisis in 2008 – corporate governance has undergone profound changes internationally. Regulators around the world have increasingly given the board of directors more responsibility for corporate risk management and sustainable development. The expectations of stakeholders and society of directors have also changed accordingly. Corporate culture and ethics have increasingly become important governance driving factors. With the rise of new technologies such as artificial intelligence, big data and blockchain, corporate governance will undergo significant changes in the future.
The current developments in governance have challenged existing ideas in areas such as board composition and diversity, and ESG reporting standards. Promoting good governance is a primary responsibility of the Institute. After changing the Institute’s name from The Hong Kong Institute of Chartered Secretaries to The Hong Kong Chartered Governance Institute, the Institute has strengthened awareness that governance is at the core of our profession. The Institute will continue to focus on the development of the dual CS/CGP qualification, and enhance the status and employment prospects of its members as governance experts.
The Institute will continue to actively participate in the development of the Mainland capital markets, expand the scope and content of its professional services, and provide better support to governance professionals. As a leader in governance, the Institute will live up to its mission and continue to lead the development of governance theory and practice in Hong Kong and the Mainland. We will work hand-in-hand with Mainland colleagues to build a path for the professional development of corporate governance and create high-standard professionals in both places.
Kenneth Jiang FCG FCS(PE)
Chief Representative, Beijing Representative Office of The Hong Kong Chartered Governance Institute
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