Three senior board secretaries share their views on the role of board secretaries, the challenges of governance practices, and the prospects of governance professionals in the Mainland.
Ma Jinru FCG HKFCG, Deputy General Manager, Board Secretary and Company Secretary, Goldwind Science and Technology Co Ltd
Goldwind is a renewable energy company specialising in the design and manufacture of wind turbine systems. It is listed on the Shenzhen Stock Exchange (stock code: 002202) and the Hong Kong Stock Exchange (stock code: 2208). The company invests in the development of wind farms and provides services related to wind power generation. Ms Ma joined Goldwind in 2010 as Deputy General Manager, Board Secretary and Company Secretary, and worked together with her team to complete the company’s listing on the Hong Kong Stock Exchange.
Ms Ma shares that the work of board/company secretaries is closely related to corporate development. ‘We can look at corporate governance from two perspectives, the first is external compliance, and the second is that it is easier to achieve development goals as a company with good governance practices. From the perspective of a listed company, the chairman of the board of directors and other managers manage the company from a macro perspective, and will not delve into the principles of corporate governance, so the responsibility of corporate governance falls on the board/company secretary. This position is very important to improve a company’s level in corporate governance.’
In the Mainland, as companies have different management and shareholder structures, board/company secretaries can face different challenges. With more than 20 years of industry experience, before joining Goldwind, Ms Ma has experience in transitioning a wholly state-owned company into a multiple shareholder structure. ‘It’s a huge change for a company to go from wholly-owned to multi-shareholder, and from private to public, and it’s important to put in place a solid governance structure, designing how the board of directors and the general meeting of shareholders will operate, what their individual powers will be, and how the rules of procedure will work. In the Mainland, because there are relatively few executive directors and the day-to-day management of the company is left to a management body, we need to pay due attention to the delegation of power and how the board can better monitor it.’
Regardless of the corporate structure, from her experience Ms Ma has found that one of the key common principles of corporate governance is balance. ‘Wholly-owned companies need to maintain relative independence between the majority shareholder and the listed company. In companies that are relatively more market-oriented and have more dispersed shareholdings, it is important for the board/company secretary to balance the interests of different shareholders and stakeholders.’
Ms Ma believes that it is important for Mainland listed companies to have a professional board secretary. Being in the middle of a series of relationships with regulators, shareholders, boards of directors and management, a board secretary not only needs to be familiar with processes such as information disclosure, corporate governance, risk control, and shareholder and investor liaison, but also needs to have a good grasp of the broader environment of the industry and its future development.
Taking the energy industry as an example, she shares that the industry has been changing over the past decade or so, with new policies coming out frequently and the landscape changing in a number of ways. A qualified board secretary must master these changes in order to truly participate in the development of the company and use the tools of corporate governance to advance the company’s strategic development.
With capital markets booming both domestically and internationally, Ms Ma believes that the requirements for board secretaries will continue to rise in the future, and she advises Mainland companies to pay more attention to the role. ‘More and more companies are seeking to develop themselves in the capital market, so there will definitely be a need for a professional like a board secretary. Now, most companies treat the board secretary as someone who can help get the company listed and raise funds after the listing, but regrettably ignore their role and power in corporate governance. Corporate governance is a mechanism that allows you to achieve the goals of your company. A good board secretary can not only help the company in the capital market, but also enable the company to establish a very healthy governance mechanism to prevent risks in its business process.’
William Zhang FCG HKFCG, Board Secretary, Vice-President and Company Secretary, Tianqi Lithium Corporation
Tianqi Lithium Corporation (the company), is a new energy material enterprise, both in the Mainland and globally, with lithium at its core, and is listed on both the Shenzhen Stock Exchange (stock code: 002466) and the Hong Kong Stock Exchange (stock code: 9696). It has strategically deployed lithium resources in China, Australia and Chile, and has established partnerships with international customers by virtue of its vertically integrated global industrial chain advantages to jointly support the long-term sustainable development of lithium-ion batteries in electric vehicles and energy storage industries.
Mr Zhang currently serves as the Board Secretary, Vice-President and Company Secretary of the Hong Kong listed company, and is mainly responsible for the operation of the board of directors, corporate governance, securities and information disclosure for both A shares and H shares of the company, domestic and overseas investor relations, equity financing, management of capital market reputation, communication with securities media, and governance of certain overseas subsidiaries.
Over the past 30 years, the company has gone through various stages of corporate restructuring, including capital expansion, global mergers and acquisitions, and listings on the stock exchanges of both Shenzhen and Hong Kong. Mr Zhang jointly coordinated the entire process of the company’s H-share listing. At that time the pace of approval or review of the Hong Kong IPO was affected to some extent because of some objective issues, while the capital market was generally less confident and the investment atmosphere was cautious. ‘The core of our success has been to strengthen industry research and trend analysis, and engage in communication with suitable investors. Although the stock market is not great, the lithium industry continues to boom. We arranged effective meetings for investors, and continued to convey the industry’s development prospects and the company’s competitive strengths to our investors.’
After the successful Hong Kong listing, Mr Zhang enhanced the overall corporate governance and investor relations plans. He established a strengthened securities and investor relations team, focusing on internationalising, refining and specialising the company’s governance, securities compliance and international investor relations practices. He was also responsible for securities compliance and management affairs in relation to information disclosure. Mr Zhang says the company is in the new energy industry and, as the industry undergoes continuous development and change, one of the challenges of his work lies in how to quickly understand and analyse industry changes, and efficiently handle relevant information.
‘In terms of better understanding the new energy industry, we can start by selecting authoritative and effective information channels, such as authoritative industry research reports, industry media and professional websites, industry associations, as well as relevant industry conferences and exhibitions. In terms of working attitude, the right direction, combined with enthusiasm, diligence and passion are essential requirements for rapidly and deeply understanding this new industry,’ Mr Zhang says.
He shares that a board secretary needs to possess a wide range of personal qualities and professional skills, including a relevant professional background, comprehensive abilities, communication and interpersonal skills, confidentiality and ethical principles, continuous professional knowledge updates, as well as technological and numerical skills, among others. Such a combination of qualities and skills will contribute to their effective performance.
Mr Zhang believes that governance professionals currently have a lot of room for development in the Mainland. They are relied on to provide professional advice and recommendations to corporate governance and management teams. However, to truly become part of the senior management of a company, there may still be certain practical disparities.
‘For example, Mainland companies may currently place more emphasis on their capital management abilities, and less on their secretarial roles to boards. This disparity in practice is related to the development processes of board secretaries. The profession of the board secretary in the Mainland has emerged relatively recently, just over the past 20 years, but is highly related to capital market development. In addition, the international expectation (deriving from the long-term development of best practice) on the roles of company secretaries/governance professionals, especially from the perspectives of international good corporate governance and compliance of capital market regulations, may shed light on the continued development of the profession of board secretaries,’ Mr Zhang says.
He also mentions that the connection and cooperation among different countries, regions and related enterprises in the world is likely to continue to deepen. Therefore, Mainland enterprises will increasingly require professionals with an international perspective to support their operations and governance on a global scale. Board secretaries and governance professionals, as indispensable roles in modern corporate systems, have a very bright and board outlook for future development.
He advises individuals interested in entering this field to prepare in advance, enhance their professional skills, obtain relevant qualifications, and make use of digital technology and AI technology to maximise their efficiency in work. ‘With the continuous emergence of new technologies and tools, board secretaries also need to continuously learn and adapt to these technologies to better support corporate decision-making. For example, the application of technologies such as artificial intelligence, big data, as well as ChatGPT, will greatly improve the efficiency and quality of the work of board secretaries,’ he says.
Yang Liang FCG HKFCG, Vice-President and Board Secretary, Lizhu Pharmaceutical Group
Lizhu Pharmaceutical Group Co Ltd is listed on the Shenzhen Stock Exchange (stock code: 000513/200513) and the Hong Kong Stock Exchange (stock code: 1513). It is a comprehensive and high-tech pharmaceutical enterprise that integrates research, development, production and sales of pharmaceutical products. The company has many years of experience in the production and sales of prescription drugs.
Mr Yang currently serves as the Vice-President, Board Secretary and Hong Kong H-share Company Secretary. His main responsibilities include handling the affairs related to board meetings, information disclosure, investor relations, capital operations (such as refinancing, equity incentives, and mergers and acquisitions), as well as ESG reporting and rating improvement. Additionally, he is also involved in the board meetings and equity management of internal subsidiaries.
He says that board secretaries serve as the gatekeepers for compliance within the organisation. Internally, they are the authority on regulatory requirements, providing decision-making support for significant strategic projects. Externally, they act as the company spokesperson and are particularly valuable in unveiling and disseminating the value of the company to investors. A qualified and professional board secretary can assist senior management in establishing a positive reputation in the capital market, help improve corporate governance structures, enhance governance standards, and leverage the capital market to accelerate business development.
Given their significant responsibilities, in terms of professional knowledge board secretaries should have a basic understanding of finance, law, securities and other relevant areas. They need to possess strategic thinking capabilities, effective communication skills and a commitment to continuous learning. ‘Corporate governance is a complex system, and its effectiveness and value realisation are closely related to fundamental factors such as the development stage of the company, the industry and the shareholder situation. So the establishment of various systems and mechanisms is crucial,’ Mr Yang says.
In recent years, because of the long-term impact of the Covid-19 pandemic on businesses and the economy, companies have focused great energy on how to maintain profitability and operational stability, with relatively limited attention given to governance. ‘However, awareness of governance is increasing in the Mainland. As dual-listed companies, we have experienced higher requirements for regulation and corporate governance, and there have been some positive changes,’ Mr Yang says.
With the revision of securities laws, the Mainland has made new revisions and regulatory requirements in areas such as listing rules, information disclosure and investor relations. The independent director system has also been further improved, and regulatory guidelines related to ESG have been internally solicited for feedback and discussion on multiple occasions. Rules, regulations and industry developments are constantly evolving and changing, requiring board secretaries to continuously update their knowledge in order to lead the company towards its goals.
This paints a promising future for the profession. ‘As regulatory efforts in the securities market continue to strengthen, the responsibilities of listed companies and their directors, supervisors and executives are increasing. The risks and penalties are also growing, leading to a continuous demand for governance professionals,’ Mr Yang says.
He advises young professionals to maintain a sense of awe and courage, and to focus on three areas while developing their skills: cultivating strategic thinking abilities in their daily jobs, promoting multi-level equity incentive plans centred around corporate performance or business development, and engaging in work related to ESG reporting and rating enhancement. ‘In recent years, the Institute has kept pace with the times by training and qualifying governance professionals in ESG, meeting the increasing demands of Mainland practitioners in Hong Kong-listed companies. The Institute has made significant contributions,’ he says.