The latest HKICS Regional Board Secretaries Panel meeting, held on 19 January 2017 in Hong Kong, was a timely opportunity for experience sharing and practical advice on shareholder communications for listed companies in the Mainland and Hong Kong.

Shareholder communications is an important part of the role of company and board secretaries of listed companies in the Mainland and Hong Kong. Even where companies employ investor relations (IR) managers to address this area of corporate governance, the company or board secretary will often be closely involved in IR work. The latest HKICS Regional Board Secretaries Panel meeting, held on 19 January 2017 in Hong Kong, was an opportunity for experience sharing on shareholder communications, in particular highlighting the different challenges faced by listed companies on both sides of the border.

Identifying your shareholders

Li Qian, Board Secretary, BYD Co Ltd, for example, gave insights on his experiences of working for BYD, an electric car maker which is dual-listed in Hong Kong and the Mainland. He pointed out candidly that it is more difficult to identify who the shareholders are in Hong Kong. ‘In the Mainland market, we know who our shareholders are. But in Hong Kong, institutional investors are often hidden behind nominee accounts and it takes more resources and effort to find out who they are, determine the structure of the underlying investor base, and track ownership over time,’ Mr Li said. 'Only when this is done can we engage our investors more proactively and maintain effective communications with them all.’ In his presentation, Mr Li also emphasised the fact that good IR helps to build company value. Through cultivating positive relationships with shareholders, potential investors, analysts, the media and other relevant stakeholders, an effective communications strategy can help increase a company's transparency and corporate governance levels, which in turn builds investor confidence and sustains the company's valuation over time. ‘Investor confidence is extremely valuable but it takes time to build. When the company is experiencing difficulties, or needs to raise capital, or is contemplating a bold move, loyal shareholders often lend their support,’ he said, adding that the stock prices of companies with good IR tend to be more stable over time relative to those with poor IR. The company secretary or IR manager should convey the message about the company's competitive advantages and investment values clearly to the target audience. He or she can make a highly significant difference, acting as a proxy for the time-constrained CEO or CFO, facilitating and informing the dialogue between the board and the investment community. ‘BYD started off as a battery maker, and began to manufacture mobile phone parts and components, and finally set foot in the electric vehicle market. We are now setting our sights on the clean energy storage sector,’ Mr Li said.

The value of shareholder loyalty

Mr Li also cited the A-share IPO of BYD that took place in mid-2011 to exemplify how solid investor relations helps to underpin a company's valuation, particularly in adverse situations. The company eventually raised RMB1.42 billion (US$219 million) from its Shenzhen IPO, priced at 18 yuan a share, which still fared better than other IPOs in terms of valuation around the same time, he said. 'By the time we prepared for our A-share IPO on the Shenzhen Stock Exchange, market sentiment had fallen to new lows. In the first quarter of 2011, as many as 30% of newly listed companies saw their share prices fall to below the IPO price,’ he recalled. ‘Between 2008 and 2010, auto sales slowed measurably and overcapacity was evident. Some dealers had also pulled out of our distribution network, causing some damage to the company's reputation. Another problem at that time was the relatively high level of gearing. These issues were raised in the discussion of risk factors in our IPO prospectus,’ Mr Li said. In the weeks leading up to the A-share market debut, BYD's H-share stock prices plunged to as low as HK$10.92, but rebounded to HK$22.5 per share just two weeks before the A-share market debut. While having secured Warren Buffett as an investor was certainly a plus, investors were concerned about the slowdown in China's passenger car market. During investor meetings in the US, Hong Kong and Singapore, the positioning of BYD as a future leader in clean energy storage and generation sector helped potential investors understand what goals BYD wanted to achieve, giving them more confidence, Mr Li said. He emphasised that, during the roadshow stage, communications with analysts are of utmost importance. Fund managers and buy-side analysts attribute a considerable premium of a company's valuation to good investor communications, he said. 'An analyst of an investment bank representing a rival issued as many as eight negative reports shorting on our company's shares. But since we had cultivated good relationships with other analysts, who understood well our firm's strengths and prospects, more reports in favour of BYD came out around the same time,’ Mr Li said. Besides the A-share listing, Mr Li also discussed how the art of IR came into play before and after the firm's H-share listing in Hong Kong and the introduction of Warren Buffett's Berkshire subsidiary MidAmerican Energy as a strategic investor.

The roles of the company secretary and IR manager

Mr Li also emphasised that the company secretary and IR manager are essentially the company's day-to-day interface with institutional and retail shareholders, analysts, financial journalists, the Stock Exchange and other regulators. While the chairman and CEO will prefer to always be optimistic about the company's long-term prospects, the company secretary and IR manager often have to manage investor expectations, in particular when adverse circumstances arise. Crisis management is therefore an important aspect of work for the company secretary and IR manager. Crises may arise as the result of many different circumstances – the company might be facing an earnings slump; the loss of key personnel; a serious criminal investigation involving the company and/or its senior executives; the arrest of the CEO; regulatory action; a legal battle; debtors going bust; an economic crisis; a major policy change; or simply a market rumour. Whatever the specific circumstances, it is always a good idea to prepare an incident response plan in advance. This should be part of the company's shareholder communications strategy. ‘If it is a rumour, then the company should figure out the cause and make clarifications with regulators and through the media to debunk it as soon as possible. The company secretary or IR manager should be the sole distribution of information in order to keep the message consistent and clear,’ Mr Li said.

A snapshot of shareholder communications practices

April Chan, former Company Secretary for CLP Holdings and former HKICS President, presented the results of an extensive survey of 413 listed companies’ on their current practices in shareholder communications to the forum. She also provided conclusions extrapolated from the findings, and gave recommendations on ways to maintain more effective, dynamic communications with shareholders and other stakeholders. To understand how listed companies maintain communications with existing shareholders and potential investors, the HKICS conducted an extensive survey of 413 companies listed on Mainland and/or Hong Kong bourses in September 2016. Over half of them are listed on Hong Kong's main board, and some are listed in more than one jurisdiction. Below are the key findings from the survey.

• About one third of the respondents said they are not sure about who their shareholders exactly are, and that they had not carried out due diligence to find out their identity and shareholdings on a regular basis.
• Only about 14.5% said it is necessary to identify shareholder composition and monitor their stock buying/selling activities. About 15.5% agreed that shareholder identification should be carried out for a purpose at some point in time. Having said that, however, this group of respondents said they had not done so previously.
• Most companies lack a comprehensive communications strategy that is targeted to all shareholders and relevant stakeholders. About 58% admitted that their existing communications with shareholders 'has some room to improve'. Despite acknowledging inadequate communications, 8.4% said there is no need to make improvements. Only 33.2% were confident that shareholder communications are sufficient and effective.
• Most companies think shareholder communications should be focused on institutional investors and long-term shareholders. A total of 269 companies, or about 55.5% of respondents, said only institutional investors and long-term shareholders have to be engaged. Only 92 respondents (19%) said they would seek to engage all types of shareholders.
• With regard to the level of participation in the company's management, the surveyed companies said institutional and long-term investors are mainly concerned about the issues below.

1. Are the CEO and senior executives overpaid?
2. Is the incentive scheme for senior executives too focused on short-term performance?
3. What is the long-term business strategy?
4. Is there a separation of the chairman and CEO roles?
5. What is the board structure and process for the appointment of directors or senior executives?

• The CEO or board lacks motivation to maintain effective shareholder communications. A total of 172 respondents, or about 40%, said senior management, the board or board members are responsible for reporting on shareholder profiles and their shareholdings. However, 241 companies said they had not carried out shareholder identification and/or simply do not know how to do it.
• The company secretary is in the right position to facilitate and help improve shareholder communications. Of those surveyed, about 52.5% said the company secretary is responsible for identifying their shareholders and analysing the shareholding structure. About 21% said the identification process is performed by the in-house IR team.
• On a positive note, most companies agree with the notion that more resources should be dedicated to maintaining effective shareholder communications in order to increase their level of participation. Also, they increasingly recognise the role of IR as a functional team.

Best practice advice

Based on the above findings, April Chan gave recommendations on how the company secretary or the IR team can improve shareholder communications and engagement. According to the survey, shareholder communications are regarded more as part of the compliance process to meet regulatory requirements, she pointed out. Therefore, to a lot of companies, shareholder communications are rules-driven, rather than being driven by intrinsic motivation. That explains why a large proportion of companies lack initiatives to proactively foster communications and build shareholder equity. According to Section E.1 of Corporate Governance Code, the board should be responsible for maintaining an ongoing dialogue with shareholders and in particular, use annual general meetings (AGMs) or other general meetings to communicate with them and encourage their participation. ‘If a company doesn’t know exactly who its shareholders are and does nothing to find them out and seek to talk to and listen to them, the compliance rule becomes meaningless,’ she said. To this end, companies should develop a communications strategy that is targeted to all relevant stakeholders able to influence perceptions of the company. In addition to regulatory bodies and exchanges, this would include current and prospective investors, sell-side and independent analysts, journalists and employees. The purpose is to manage the interests of these parties by establishing a framework of communications activities to ensure they are fully informed about the performance of the company, as well as identifying potential issues that may influence the company's reputation. Together these will improve understanding of the company's investment proposition, which in turn will help increase the valuation of the company's equity by attracting capital, reduce share price volatility and reduce funding costs, she said. Ms Chan set out the practical measures suggested by the HKICS survey report, as listed below.

• Formulate a comprehensive shareholder communications strategy and integrate it into the company's business strategy. About 62% of the surveyed companies said they monitor investor shareholding structure on a regular basis. About one third said they monitor it once in a while, while about 30% said they would do so only when a large number of shares change hand.
• Companies are advised to identify, monitor and review their shareholder base and shareholdings, so that resources can be deployed more effectively to target the right audience. Also, the company secretary, IR team, senior management and directors overseeing investor relations, should be well aware of any substantial acquisition or disposal of the company's shares.
• The company's shareholder communications policy should cover existing shareholders and potential investors; institutional investors, brokers, financial institutions, analysts, journalists, etc; other stakeholders who might influence the company's stock prices; exchanges and regulators; as well as employees, suppliers and customers.
• AGMs are no longer the only, or even the most effective channel for shareholders to get involved in the decision-making process. They can make their voices heard by talking directly to the company, submit resolutions for a vote at regular shareholder and annual meetings, through the media, and, less preferably, through regulators.
• Determine who is going to handle IR on a daily basis. Should the CFO, company secretary or IR team head be held responsible? How does the reporting line work? Should the CEO, CFO, Chairman, board or a board-level committee oversee?
• Set benchmarks to gauge the effectiveness and benefits of investor engagement programmes and activities. For example, how many meetings, formal and informal, are arranged with investors in a financial year? This helps companies create a realistic budget and fund the most effective channels or activities.

Jimmy Chow Journalist The HKICS report (Shareholder Communications for Listed Issuers – Five Imperatives to Break the Monologue) is available on the Institute's website: www.hkics.org.hk.  

與股東保持緊密溝通 – 中港上市企業就維持良好投資者關係的經驗分享

2017年1月19日，香港特許秘書公會舉行了今年度首次公司秘書／董事會秘書圓桌會議。席間，嘉賓和與會者暢所欲言，坦誠分享了內地和香港上市公司在維持良好投資者關係的經驗和建議。

股東溝通是中港上市公司公關戰略重要一環，對保持市場對公司信心、維持股價穩定、以至提升市場集資能力等，都發揮關鍵作用。即使一些公司聘用投資者關係經理去處理日常股東溝通工作，公司秘書也須與投資者關係部門保持緊密合作。 於今年初在港召开公司秘书／董事会秘书圆桌会议，成為了中港上市企業公司秘书／董秘就投資者關係的經驗分享平台，出席者更特別就兩地上市公司所面對的挑戰作深入交流。

如何識別股東身分

演講嘉賓電動車生產商比亞廸董秘李黔指出，公司作為AH股公司，在港較難辨別股東身分。他說：內地採用的是股東實名制，股東身分一目了然。然而，香港上市公司機構投資者往往隱藏於代理人户口之後，要追查他們的身分須花上相當資源和時間，才能了解各人的持股量和整體股東結構。只有這樣，我們才能更積極地與投資者接觸和溝通。 李黔在演說中還強調，維持良好的投資者關係，有助建立公司價值。通過與股東、潛在投資者、分析師、媒體和其他相關持分者建立正面積極的關係，通過有效的溝通戰略，能提升公司的透明度和治理水平，從而建立投資者信心，長遠保持公司價值。 “投資者信心難能可貴，它需要時間來建立、用心去經營。在逆境時，或需籌集資金，又或正考慮重大投資項目，忠誠股東總會給予支持。”他說道。做好投資者關係的上市公司，其股價表現和穩定性，往往優於沒做好投資者關係的公司。 公司秘書或投資者關係經理，好應該向目標受眾，傳達有關公司的競爭優勢和投資價值等正面信息。這做法對公司形象有莫大好處，為時間有限的首席執行官或首席財務官的擔當對外聯系角色，促進董事會和投資界之間的對話與溝通。 “比亞廸從最初生產電池，到後來製造手機零部件，近年躋身電能車市場。我們現正進軍清潔能源存儲行業，股東信心對我們過往作出的重大決定，提供極大支持。”他說。

艱難時期 投資者忠誠更顯重要

李黔以該公司於2011年中深圳A股市場掛牌上市作為例子，解釋良好投資者關係，如何支持公司估值，特別在艱難時期。比亞廸最終從深圳A股市場，募集了14.2億元人民幣（2.19億美元）資金，每股定價為18元人民幣，與同期掛牌上市公司比較，估值仍然優於其他公司。 他憶述："當我們正在籌備在深圳A股上市前，市場氣氛跌至新低。2011年首季，更有約三成新股破發。" “在2008年至2010年期間，國內汽車銷售明顯放緩，產能過剩明顯。 有部分經銷商更退出我們的銷售網，對公司的聲譽造成了一些損害。 當時另一個問題是，我們的負債比率較高，這些風險我們都須在招股書中披露。” 在A股掛牌前幾星期，比亞廸H股股價暴跌至10.92港元，但在正式掛牌兩周前，股價反彈至22.5港元。雖然，獲巴菲特入股是信心一大保證，但其時投資者擔心，中國汽車銷售市場放緩，將影響公司前景。 在美國、香港和新加坡路演期間，比亞廸成功把公司的定位和發展藍圖向機構投資者交代清楚，銳意成為清潔能源儲存、太陽能電站和電動汽車的領導者，幫助投資者了解比亞迪的未來目標。 他強調，在路演階段，與分析師保持良好溝通至關重要。基金經理和買方分析師普遍認為，良好投資者關係能提升公司估值溢價。 “當時，協助競爭對手投資銀行的分析師，在短時間裡發出了多達八個針對比亞廸的負面報告。但是，由於我們與其他分析師建立了良好關係，他們了解到公司的優勢和發展前景，在差不多時間裡也發出持平正面的分析報告，維持投資者信心。” 除了比亞廸在深圳A股的上市經驗之外，李黔還通過其在香港的上市和引進巴菲特旗下伯克希爾子公司MidAmerican Energy作為戰略投資者等寶貴經驗，與出席者分享良好股東溝通對維持市場信心的重要性。

公司秘書和投資者關係經理的角色

李黔強調，公司秘書和投資者關係經理，是公司與機構投資者、散戶、分析師、财经媒體、交易所和監管機構的對口單位。可以理解，董事長或首席執行官傾向對公司長期前景持樂觀態度，但公司秘書和投資者關係經理，則有需要以較持平態度，管理投資者期望，尤其在情況不利之時。 故此，危機管理是公司秘書和投資者關係經理工作的重要範疇。危機事件通常有：利潤全面下滑或局部下滑；重要人才流失；公司及其高管的重大違法行為；受到監管部門處罰；被提起重大訴訟；重要債務人出現危機；宏觀經濟政策出現重大不利變化；財經媒體、網絡上出現重大不利消息或言論等。 “如果是謠言，公司好應找出原因，查清來龍去脈後，盡快向監管機構和通過媒體作出澄清。危機應當實行集權管理，管理者應當統籌全局，處理投資者、分析師、媒體等各方關係，統一口徑。”

股東溝通實踐調查報告

香港中電前公司秘書、香港特許秘書公會前會長陳姚慧兒女士，向出席者簡報了上市公司股東溝通現行做法的調查報告。她從調查結果歸納出總結，並就如何與股東和其他利益相關者保持更有效、更有活力的溝通聯系，提出了多項建議。 為了解上市公司如何與現有股東及潛在投資者進行溝通，香港特許秘書公會在2016年9月，以問卷方式訪問了413家在內地和／或香港和／或海外交易所上市的公司，其中超過半數在香港主板上市，部分在多於一個地區的市場掛牌。 以下是調查結果分析：

• 大部分上市公司不太確定誰是公司的股東。問卷結果顯示，三分之一的受訪公司不確定誰是公司的股東。他們並未定期或例行監察其股東構成。
• 部分上市公司似乎不願花費精力去調查誰是股東。14.5%的受訪者表示應當例行監察股東構成，15.5%的受訪者則表示應當為特定目的臨時監察股東身份，卻皆未付諸行動。
• 大多數上市公司缺乏溝通策略。约58%的受訪者承認，其與股東的溝通未夠充分或有些不足，而且認為需要改進。然而，8.4%的受訪者雖然承認其溝通不充分但認為不需要改進。僅33.2%的受訪者認為其溝通充分。
• 大多數受訪者認為，參與的方式應視乎股東類型而定，不應一概而論。受訪者深信公司應更有效地與股東溝通。少數受訪者（92家，19%）認為公司應與所有股東溝通，但大多數（269家，55.5%）認為，只需要讓機構投資者和長期股東參與。此外，受訪者認為，這些投資者有主動參與公司事宜的盡責管理角色。
• 關於股東對公司管理的參與度，受訪公司表示，機構和長期投資者主要關注以下議題。

1. 首席執行官／高管薪酬過高
2. 高管激勵機制過於強調短期表現
3. 提供較長期公司戰略資料的呼籲
4. 首席執行官與董事會主席的角色分離
5. 董事會架構及董事會成員的委任

• 首席執行官或董事會在股東溝通方面缺乏問責。很多公司（172家）向高級管理層、董事會或董事會委員會匯報股東的數據。但更多公司（241家）並不報告這些數據或不知道如何使用這些數據。
• 公司秘書可幫助改進投資者關係。在52.5%的受訪公司中，公司秘書負責分析股東構成，而由投資者關係主管負責這一領域的受訪公司居其次，佔21%。許多公司稱正在對投資者關係活動（包括股東溝通和參與）投入更多資源，而且愈來愈看重投資者關係職能。
• 慶幸的是，大多數公司都認同有需要投放更多資源於維持有效的股東溝通，以提高股東對的參與度。此外，他們越來越認識到投資者關係作為一個職能團隊的重要性。

建議的五項必要措施

基於上述調查結果，陳姚慧兒就公司秘書或投資者關係團隊如何改善股東溝通和參與度提出了以下建議。 調查結果顯示，對很多上市公司來說，股東溝通被視為一項合規任務，而非一項主動承擔。換言之，股東溝通是被動地由法規和規則推動，而非公司主動選擇與股東溝通和接洽。與監管推動的力度脫節，有關加強溝通的監管推動力度，與上市公司對其必要性或重要性的實際認知度之間似乎脫節。 現狀削弱股東溝通的價值，如果上市公司並不切實了解其溝通的股東是誰，不通過接洽股東了解溝通的有效性和相關性（即通過反饋來改進溝通方式），那麼僅是基於監管要求的股東溝通的實際價值和質量必定會被削弱。 根據《企業管治守則》E.1關於與股東有效溝通原則，董事會應負責與股東持續保持對話，尤其是藉股東周年大會或其他全體會議與股東溝通及鼓勵他們的參與。 “如果公司連股東是誰也不知道，也不積極地找到他們並尋求與他們對話、聽取他們意見，只為了遵照守則來進行股東溝通，那麼所做的便失去了意義。”她說。 為此，企業應制定一項針對所有持分者的溝通戰略，正面影響他們對公司的看法。除了監管機構和交易所外，也包括目前和潛在投資者、賣方和獨立分析師、媒體和公司員工等。此舉目的是通過建立溝通活動框架，以確保他們充分了解公司的業績，以及查找出可能影響公司聲譽的潛在問題。 根據調研結果，她提供下列建議，相信能有助投資者了解公司的營運方針，從而提升公司估值，吸引資金，降低股價波動和降低資成本。

• 制定投資者關係策略並將其納入公司戰略。公司董事會需要關注投資者關係，以及實施相關的策略。公司認定投資者性質，識別重大投資者顯然具有重要意義.约62%的受訪者表示存在對投資者構成的例行監察，約三分之一施行定期監察，另约30%施行臨時監察，有可能在发生大量股份换手时。
• 建议公司定期查找、检视和回顾股东持股量及分布，从而把资源投放至合适的沟通对象。与此同时，公司秘书、投资者关係部门、管理层或负责投资者关係的董事，也应时刻注意公司重大的股权变化。
• 股東溝通政策可反映公司在以下方面的實踐：與股東和潛在股東的溝通；與非股權類投資者的溝通；與機構投資者、經紀、經手公司股份的其他金融機構、分析師、財經媒體、以及可能會影響市場從其影響股票價值的其他各方的關係。
• 股東周年大會不再是股東參與決策過程的唯一、甚至不一定是最有效的渠道。他們可以直接與公司對話，在正式股東和年度會議上提交決議，或通過媒體，再其次是通過監管機構，反映意見。
• 訂定到底由誰負責日常投資者關係，是首席財務官、公司秘書還是投資者關係團隊？誰向誰匯報？是由首席執行官、首席財務官、董事會主席、整體董事會或董事會某委員會負責監督投資者關係工作和績效？
• 最後，公司可考慮就投資者關係績效設定考核基準，以衡量投資者參與度、活動有效性和益處。 例如，在一個財政年度裡，為投資者安排了多少正式和非正式會議？ 這有助於公司作實際預算，調配資源到最有成效的渠道或活動。

Jimmy Chow Journalist