The chairmen of two new committees set up by The Hong Kong Chartered Governance Institute update readers on the benefits of building an influential and expanded professional network in the Mainland.
Governance professionals and directors working in Hong Kong and the Mainland have been adapting to an increasingly complex regulatory environment in recent years – and one in which their own personal liabilities have risen steeply. In this context, earlier this year, The Hong Kong Chartered Governance Institute (the Institute) established two new committees under its Mainland China Technical Consultation Panel – the Board Secretaries Committee, and the Directors and Supervisors Committee – to give greater support to board secretaries, directors and supervisors in their work.
The first meetings of these committees have already been held, setting out the goals they will be working towards in the years ahead. Broadly, the two committees will focus on facilitating training support to directors, supervisors and board secretaries, as well as building a stronger professional community for experience exchange, networking and representing members’ interests in key areas such as regulatory reform and governance.
In this article, Xie Jilong FCG FCS, Chairman of the Board Secretaries Committee and former Board Secretary of CRRC Corporation Ltd, and Wu Enlai FCG FCS, Chairman of the Directors and Supervisors Committee and former Board Secretary of China National Petroleum Corporation, talk to CSj about the work and aspirations of their respective committees.
The Board Secretaries Committee
The Board Secretaries Committee was established in January 2021 to build a professional and practical experience exchange platform for board secretaries of listed companies inside and outside the Mainland. It also aims to attract outstanding domestic and foreign company secretaries of listed companies into the professional platform provided by the Institute.
The committee provides professional training, guidelines and communication platforms for board secretaries by organising lectures and seminars, compiling guidelines and issuing advisory opinions. At present, its main functions are to:
- discuss and provide opinions on laws and regulatory policies issued by the government and regulatory authorities relating to the professional skills and practices of board secretaries
- discuss and provide opinions on questions raised by members and co-members relating to the professional skills of board secretaries
- organise board secretaries, as members or Affiliated Persons of the Institute, to discuss and compile guidelines on relevant areas of their practice
- promote the adoption of best practices in the work of board secretaries
- organise professional seminars, and
- provide support for the promotion of the profession in the Mainland.
The Board Secretaries Committee comprises 14 members, all of whom are board secretaries of enterprises listed on The Stock Exchange of Hong Kong, including both state-owned and private companies (see Committee membership). At the committee’s first meeting, held in Changchun in April 2021, members identified and discussed the key areas of their future work. Members agreed that a core area of that work will be coordinating the efforts of board secretaries and other managers in guiding relevant regulatory policies in Hong Kong and the Mainland.
Mr Xie points out that there are differences in the way new regulations are adopted in Hong Kong and the Mainland, but he believes that committee members should actively express their opinions and voice their concerns. ‘The formulation and promulgation of policies and regulations in the Mainland does not have a consultation process similar to that of Hong Kong, but the committee believes that the Institute can take the lead as a professional organisation to mobilise members to express their views and proposals regarding regulation, in order to influence the formulation and revision of regulatory policies. The committee also hopes that in the long term it can promote the healthy development of corporate governance in both Hong Kong and the Mainland,’ Mr Xie says.
Recent legislative and regulatory changes in both the Mainland and Hong Kong have had a direct impact on members of the profession. Both the Securities Law, which came into force in the Mainland on 1 March 2020, and changes to Hong Kong’s Listing Rules strengthening the disciplinary powers of regulators, which came into force in July this year, have led to higher professional liabilities for board and company secretaries.
Mr Xie explains that the new Securities Law, together with the Criminal Law and supporting regulations, has clarified the rules and how to comply with them, and has increased the accountability and the penalties for relevant individuals to act as an effective deterrent against malpractice. This, he adds, has incentivised practitioners to continue their training and improve the performance of their duties.
He adds that regulatory changes in Hong Kong have had a similar effect. The recent revisions to the Listing Rules were designed to make the rules more market-oriented, but they have also strengthened the disciplinary powers of regulators and created a more precise legal environment for listed company compliance. One consequence will be that listed companies will have to be a lot stricter in compiling their annual reports and communicating with stakeholders.
The net effect for members of the profession, Mr Xie emphasises, is that practitioners will have to up their game. ‘The regulatory approach has evolved from self-disciplinary supervision to administrative supervision to legal supervision, and at each stage board secretaries have been given new responsibilities. In addition to dealing with regulators, board secretaries are also responsible for coordinating internal training and even the company’s market value management. As compliance becomes more and more important, breaches of the regulations could lead to a criminal conviction for board secretaries. This forces board secretaries to prioritise compliance. Inevitably, this will sometimes conflict with a company’s development, but compliance should be the bottom line that board secretaries stick to,’ Mr Xie says.
Against this background, Mr Xie adds that board secretaries also need to pay more attention to their own ongoing training, and this does not only mean staying up to date with the latest regulatory changes. In the current international geopolitical environment, and as a result of the Covid-19 pandemic, the work of board secretaries has become much more complicated. Practitioners need to be aware of geopolitical changes and their potential impact on their company. They need to actively respond to major global changes, while also learning to adopt flexible and diverse methods to strengthen communication with investors.
The Board Secretaries Committee aims to help members of the profession cope with the changes outlined above. ‘The future development of the governance profession must start with the community really caring about corporate governance. It is necessary to create a legal and cultural environment in which people really care. In the future, the committee hopes that the professional status of board secretaries can be raised to the same level as that of accountants and lawyers. We are also considering doing some work in providing protection or relief measures for board secretaries,’ Mr Xie says.
The Directors and Supervisors Committee
In contrast to the single-tier board structure most common in Hong Kong, the Mainland adopts a dual-tier board structure comprising executive and supervisory boards, and these boards play a critical role in ensuring good corporate governance. As a professional body primarily concerned with the promotion of good governance, the Institute established the Directors and Supervisors Committee in January 2021 in order to enhance and expand the professional skills of its members, provide professional services tailored to members’ needs and to establish a channel for members to engage in the broader professional field of corporate governance.
The committee provides professional training, practical guidelines and a communication platform, and speaks on behalf of directors and supervisors. It holds lectures and seminars, and writes practical guidelines and issues advisory opinions. The committee also discusses and provides opinions on legal and regulatory policies related to the professional skills and practices of directors and supervisors. In addition, the committee will compile practical guidelines in order to promote best practice among directors and supervisors.
Currently, there are 12 members in the committee (see Committee membership). The first committee meeting, held in Guiyang on 20 May 2021, reached two main conclusions. Firstly, members agreed to establish a talent pool for boards of directors and supervisors. This will help senior board secretaries establish a new career path as directors. The committee also intends to provide consulting support for directors in the talent pool to help them fulfil their duties. Secondly, committee members agreed to prepare guidelines relating to the selection of directors and supervisors, the rights and obligations of directors and supervisors, and the potential liabilities they may face. Committee members believe that the guidelines will help regulate the arbitrariness of the appointment of directors.
‘Because of the geopolitical relations between the Mainland, the US and Europe, fewer companies will choose to list in the US or Europe, and more companies will be listed in Hong Kong in the future,’ Mr Wu explains. ‘With these two capital financing channels gone, and the Singapore market being too small, initial public offerings in Hong Kong are certain to increase and this will cause an explosive increase in the demand for board secretaries, full-time directors, independent directors and supervisors, as well as other professionals. This market demand is why we think we need to establish a talent pool and guidelines as soon as possible,’ he says.
The committee believes it can play a valuable role in helping members of the profession adapt to changes in the macro environment and building the Institute’s professional platform to coordinate the resources of all parties and improve its professional and service capabilities. ‘We have identified our specific tasks and are currently writing practical guidelines for independent directors because many independent directors do not know what their responsibilities and obligations are, or even what their liabilities are, and what legal issues they will face when they perform their duties,’ Mr Wu explains.
He points out that directors and supervisors within, or affiliated with, the Institute have good practical experience to bring to these issues. They have capital market experience and supervision experience, in addition to the expertise they have acquired from their professional backgrounds in law, finance and business. ‘These people are very valuable,’ Mr Wu says. ‘We will write an app enabling companies, organisations, governments and regulatory bodies to log in and find the talent they are looking for, just like they’re going shopping. We will also determine what qualifications and experience a person needs to enter the talent pool, and there will be regular seminars and training in the future.’
Mr Wu adds that the committee will also stay alert to the possibilities for future improvements and how to make better use of the Institute’s professional platform. ‘We hope to offer regular ongoing training in the future. Also, we hope to broaden the awareness of our talent pool among enterprises, exchanges, securities regulators and other regulatory agencies. This will be particularly important for enterprises. It is difficult for some small local state-owned enterprises and private companies to find suitable independent directors and supervisors. People from all walks of life are here, so the role of the Institute as a bridge will become more and more important in the future,’ he says.
SIDEBAR: Committee membership
Board Secretaries Committee
Xie Jilong FCG FCS (Chairman), former Board Secretary, CRRC Co Ltd
Guo Huawei FCG FCS (Deputy Chairman), Board Secretary, COSCO SHIPPING Holdings Co Ltd
Zhu Xu ACG ACS (Deputy Chairman), Board Secretary, Vanke Enterprise Co, Ltd
Fu Rong FCG FCS, Board Secretary, Shanghai Electric Group Co Ltd
Huang Chaoquan, Board Secretary, Huaneng International Power Co Ltd
Li Qian FCG FCS, Board Secretary, BYD Co Ltd
Ma Jinru FCG FCS, Vice-President, Board Secretary, Company Secretary, Xinjiang Goldwind Technology Co Ltd
Meng Xiangyun, CEO, Jianwei Digital Technology Co Ltd
Sui Li, Board Secretary, Head of the Financial Business Division, Guangzhou Automobile Group Co Ltd
Yang Liang, Board Secretary, Livzon Pharmaceutical Group Co Ltd
Zou Zhihong, Board Secretary, General Manager of the Legal Department, People’s Insurance Company of China
Du Chunye, Vice-President, Board Secretary, China Postal Savings Bank Co Ltd
Zhang Jingyan FCG FCS, Board Secretary, Company Secretary, Beijing Tongrentang Technology Development Co Ltd
Yi Baohou, former Board Secretary, Company Secretary, China Coal Energy Co Ltd
Directors and Supervisors Committee
Wu Enlai FCG FCS (Chairman), former Board Secretary, China National Petroleum Corporation
Jin Xiaobin FCG FCS (Deputy Chairman), Executive Director, Aijian Group/ Aijian International Asset Management Co Ltd
Guo Xiangdong FCG FCS (Deputy Chairman), Board Secretary, Deputy General Manager, Guangshen Railway Co Ltd
Chen Liping FCG FCS, General Manager, China Shipbuilding Ocean and Defense Equipment Co Ltd
Gan Liwei, General Manager, Chief Financial Officer, AVIC Helicopter Co Ltd
Liu Yunhong, Independent Non-executive Director, Shanghai Electric Group Co Ltd
Wu Chengming, Board Secretary, China Galaxy Securities Co Ltd
Xie Lin, Chairman of the board, CCID Consulting Co Ltd
Ye Yumang FCG FCS, Deputy General Manager, Shanghai COSCO Shipping Logistics Co Ltd
Zhou Lianqing FCG FCS, former Board Secretary, Huadian International Power Co Ltd
Xie Xinyu FCG FCS, Executive Director, Deputy General Manager, Company Secretary, Anhui Wantong Expressway Co Ltd
Kang Jian, Vice-President, Board Secretary, Beijing Jingneng Clean Energy Co Ltd
在本文中，董秘委主任委员、中国中车股份有限公司原董事会秘书谢纪龙先生FCG FCS，以及董监委主任委员、中国石油天然气股份有限公司原董事会秘书吴恩来先生FCG FCS，分别与CSj畅谈各自委员会的重点工作以及未来展望。
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