Kenneth Jiang FCG HKFCG(PE), Chief Representative of the Institute’s Beijing Representative Office, reviews the work of the Institute in the Mainland in fiscal 2021/2022.
The Institute has shown great resilience in the face of the nearly two-year-long pandemic that has limited travel and social interaction. Faced with dual challenges of Covid-19 pandemic and the globally enhanced requirements for ESG information disclosure, the Institute, with the mission of enhancing the practical skills of governance practitioners and continuously improving the governance standards of listed companies in both Hong Kong and the Mainland, has promptly shifted its activities and services to online or hybrid mode. Through its forward-looking thought leadership, the Institute proactively provided practical support and solutions in a timely and effective manner to governance practitioners, meeting the continuous improvement and communication needs of Affiliated Persons (APs), members, students and graduates.
New brand for a new beginning
The year 2022 marks the 25th anniversary of Hong Kong’s return to the motherland. Over the past 25 years since its return, Hong Kong’s guiding principal of ‘one country, two systems’ has been continuously developed in practice, leading to the active participation of Hong Kong stakeholders in the cause of national prosperity and great rejuvenation of the nation.
2022 is also the first year of the Institute’s launch of its new brand. With effect from 20 July 2021, the Institute changed its name to ‘The Hong Kong Chartered Governance Institute’, and launched a new brand identity in January 2022. Our new brand better reflects the governance role and professional values of our members. It also helps to increase the public’s awareness of the governance work undertaken by our members and enhances the professional influence of our members in governance field. The name change was also supported by the majority of Mainland APs and members, who generally believe that the term ‘governance’ can better represent the professional scope of the Institute and is in line with the cutting-edge developments in international corporate governance.
Since Hong Kong’s return, the number and market capitalisation of Mainland companies listed in the Hong Kong capital market has continued to rise. As at the end of 2021, there were 1,368 Mainland companies listed in Hong Kong, accounting for 78.9% of the total market capitalisation. In 2021, the number of newly listed Mainland companies accounted for 89% of the total number of new listings in Hong Kong and 98% of the total IPOs were by Mainland companies. Thus, the development of the Institute in the Mainland has become increasingly important.
In November 2021, Institute Council held a strategy meeting to review the development of the Institute in Hong Kong and the Mainland and to discuss the way forward. It was agreed that the professional development of the Institute in the Mainland should be further strengthened.
In 2022, two new Council members with Mainland expertise were elected to the 2022 Council and a Mainland China Affairs Committee (MCAC) was established to ensure the development and implementation of a proper Mainland strategy to further expand the Institute’s professional presence in the Mainland and promote the Institute’s professional qualifications. The MCAC comprises seven senior professionals, five of them are past/current Presidents and one Vice-President, and all members have extensive experience in Mainland business and have deep insights into the professional development of the Institute in the Mainland. We are confident that under the leadership of the MCAC, new opportunities will arise for the Institute’s development in the Mainland.
Focusing on governance priorities
Since 2017, many international organisations and institutions have been raising the bar on corporate ESG disclosure requirements, especially in relation to climate change. ESG and climate change reporting has become a top regulatory concern and there is an urgent need for companies to develop transformation plans and implement them progressively. Therefore, in addition to continuing to focus on governance practices and solutions, the Institute has provided timely interpretation and practical support on ESG and climate change related reporting in its Enhanced Continuing Professional Development (ECPD) seminars during this fiscal year.
In November 2021, the Institute held a webinar to engage relevant industry experts to explain and discuss ESG and climate-related issues in depth. The webinar was supported by Hong Kong Exchanges and Clearing Ltd (HKEX), MSCI, Fidelity International, CDP Global Environmental Information Research Centre and other institutions, and by experts from the Task Force on Climate-related Financial Disclosures (TCFD).
The webinar introduced participants to the key regulatory initiatives on climate change by HKEX and international investors’ expectations on sustainable investment. Highlighted, among other things, were guidelines and other practical issues related to ESG and climate change disclosures, business strategies development based on TCFD recommendations and a roadmap to carbon neutrality. This webinar was well received by attendees.
In this fiscal year, the Institute has formally expanded the target groups of the Mainland’s ECPD seminars to three major governance professional groups, namely, board secretaries, directors/supervisors and financial heads. Throughout the year, in addition to the original seminars for board secretaries, directors and supervisors, two special trainings have been arranged for financial heads in order to meet their training needs in governance practice.
The Institute held seven ECPD seminars in the Mainland throughout the year, including six webinars and one physical seminar. Such events attracted 600 attendees, of which 40% were board secretaries, 37% directors and supervisors and 23% financial heads and other governance-related senior executives. Most of these seminars were conducted online. Through the implementation of diversified methods, such as interactive lectures, Q&A sessions and post-class practice questions, the webinars enabled exchanges and interactions between the participants and the speakers.
Topics included risk management and ESG; directors’ duties and governance practices; major transactions, connected transactions and insider trading management and control; information disclosure and inside information management and control; annual financial auditing and annual report; corporate governance report; M&A and transaction control etc. Corporate governance and ESG-related topics accounted for over 50% of the webinars.
For APs, in order to better identify the scope of the profession and the target audience after the change of the Institute’s name, the AP ECPD Seminars have been renamed Governance Professionals ECPD Seminars with effect from July 2022.
The Institute’s Governance Professionals ECPD seminars closely aligned with the latest regulatory developments and governance practices and the seminar speakers have been carefully selected from senior professionals or senior board secretaries. As a result, the Governance Professionals ECPD seminars have become a widely-recognised platform for ongoing professional training and exchange with peers and regulators for both domestic and overseas listed companies.
As of the end of June 2022, the Institute had held 62 related ECPD seminars with more than 8,500 participants. The participants included board secretaries, directors, supervisors, financial heads and other governance-related senior managers. The number of non-APs attending such seminars accounted for about 80% of the total, indicating that the influence of the Institute’s AP programme extends far beyond the AP community.
Mainland APs are a special group of governance practitioners incorporated into the Institute’s professional framework. The target groups of the Institute’s AP programme comprise board secretaries, directors, supervisors and other governance professionals from companies listed or planning to get listed in Hong Kong. As of 30 June 2022, the Institute had a total of 158 registered APs, including 39% from H-share companies, 29% from A+H-share companies and other multiple-exchange listed companies, 17% from Red Chip companies, 8% from A-share companies and 7% from companies planning to list in Hong Kong.
In recent years, thanks to the continuous increase in the number of listed companies in both Hong Kong and the Mainland, as well as the regulators empowering company secretaries and board secretaries with more corporate governance responsibilities, as well as the Institute’s strategic initiatives to promote professional reform, professional qualifications issued by the Institute have been recognised by more and more listed companies and regulators in both Hong Kong and the Mainland. The number of Mainland students and members has continued to grow steadily.
As of 30 June 2022, the Institute had 300 registered students in the Mainland, maintaining a steady growth trend. The Institute had 200 Mainland members and graduates, an increase of 59% over last year, mainly due to the large number of students who graduated the Postgraduate Programme in Corporate Governance (PGPCG) by the Hong Kong Metropolitan University and successfully applied for membership. For the first time in the Mainland, the Institute has experienced a major turning point at which the number of members exceeds the number of APs.
Thought leadership on corporate governance has always been an important part of the Institute’s work in the Mainland. By providing practical training to board secretaries and governance professionals, as well as providing advice and suggestions to regulators on policy formulation and revision, the Institute continues to contribute to the improvement of corporate governance in both Hong Kong and the Mainland.
In this fiscal year, the two sub-committees under the Institute’s Mainland China Technical Consultation Panel (MCTCP), namely, the Mainland China Board Secretaries Subcommittee and the Mainland China Directors and Supervisors Subcommittee, have played an important role in strengthening the Institute’s research capability and enhancing its role as a communication platform for corporate governance professionals of companies listed or planning to get listed in Hong Kong.
Within the previous year, the Institute has worked on three substantive research projects, namely, Guidelines on Practices of Information Disclosure of Companies Listed in Hong Kong and the Mainland (Third Edition), Guidelines on Practices of Connected Transactions of Companies Listed in Hong Kong and the Mainland, Guidelines on Practices of Directors of Mainland Companies Listed in Hong Kong. These three Guidelines are expected to be completed by the end of 2022.
Looking ahead, there is great potential and opportunity for the Institute’s professional development in the Mainland. The increasing global attention to ESG, especially issues related to climate change, the complex international situation and the development of new technologies have presented new governance issues. Thus, corporate governance has become increasingly complex and its importance has been raised to an unprecedented level.
As a professional organisation with corporate governance as its core, the Institute will continue to actively participate in the development of the Mainland capital markets. The Institute will actively expand the scope and the content of its professional services, provide more professional and quality services and support to Mainland members, students, APs, board secretaries, directors/supervisors and financial heads, as well as other governance professionals. The Institute will continue to cultivate more governance talents and to contribute to the enhancement of the professional standards and professional status of governance professionals.
Kenneth Jiang FCG HKFCG(PE)
Chief Representative, Beijing Representative Office of The Hong Kong Chartered Governance Institute