Three board secretaries share their first-hand experience of the challenges of working for Mainland enterprises listed in both Hong Kong and the Mainland, as well as the benefits of being a member of The Hong Kong Institute of Chartered Secretaries.
Dr Guo Huawei
Dr Guo Huawei, FCIS FCS, is the Board Secretary of COSCO Shipping Holdings Company Ltd, which is listed on the Shanghai Stock Exchange (stock code: 601919) and the Hong Kong Stock Exchange (HKSE)(stock code: 1919). He is also the Deputy Chairman of the Board of Supervisors of the China Association for Public Companies.
COSCO Shipping Holdings Company Ltd is the listed flagship and a subsidiary of China COSCO Shipping Corporation Ltd, which is the largest integrated shipping company in the world. In addition, the company holds a 100% equity interest in COSCO Shipping Lines Company Ltd, a 47.94% equity interest in COSCO Shipping Ports Ltd (stock code: 1199) and a 75% equity interest in Oriental Overseas International Ltd (stock code: 0316).
The board secretaries of these two listed subsidiaries are responsible for managing the governance and compliance issues independently, from information disclosure, board governance and risk control to shareholder communications and investor relations, says Dr Guo. ‘Including myself, we are active members of the Institute and have participated in the conferences, training and networking events organised by the Institute.’
‘As the board secretaries for an A+H share listed company, we play a dual role in ensuring compliance with the rules imposed by regulators in Hong Kong and the Mainland, including the investor relations (IR), internal risk management and environmental, social and governance (ESG) reporting requirements. Very often, we also act as spokespersons for the companies and handle inquiries from investors, analysts and the media,’ says Dr Guo.
Since there are more international financial media outlets in Hong Kong, there is an IR team in Hong Kong that is dedicated to handling inquiries from shareholders, analysts and journalists, he adds. ‘The importance of IR as a strategic management function is growing. Whether it is the board secretary or the IR manager handling this function, practitioners are expected to command both financial and communication expertise to achieve effective results.’
‘Take our group of companies as an example. We are shipping companies and therefore the board secretary and the IR manager should further have professional knowledge of vessel operations, cargo handling, port logistics, etc. Apart from bringing insights and perspectives to the board, the board secretary should also be able to translate complex financial and industry concepts into layman’s terms to external stakeholders,’ Dr Guo says.
The board secretary of an A+H share company should be able to engage confidently with both the Hong Kong and Mainland regulators. In whichever jurisdiction, the utmost respect for the rule of law is the cornerstone and this has proven to be key to the success of Hong Kong as an international financial centre. Though gradually catching up to international best practices, there is some room for improvement in the Mainland in terms of information disclosure transparency, Dr Guo adds.
He also highlights other regulatory differences between the Mainland and Hong Kong. The appointment of a securities affairs representative to assist the board secretary is mandatory in the Mainland, for example, but not in Hong Kong. When board secretaries are unable to perform their duties, the securities affairs representatives step in to become their deputies. Another difference is that in Hong Kong information filed with the Exchange, as well as information disclosed to shareholders, has to be written in plain English and Chinese so that shareholders can choose to read such materials in English or Chinese.
‘Whatever the regulatory differences, we strive to achieve corporate governance standards that meet the requirements of all regulators across both markets. When it comes to information disclosure, more is better than less. The key here is to ensure the message we convey is complete, consistent and credible across both regulatory regimes,’ Dr Guo says.
On the topic of board diversity, he points out that, apart from the gender mix, the skill sets, backgrounds and experiences of members of the board all count and actually complement each other. Diversity in these areas results in different opinions from different perspectives helping directors to arrive at the right conclusion on serious strategic issues. Increasing the diversity of independent directors therefore offers a means by which a range of external interests can be represented on the board and this can have a positive impact on company performance.
‘There are four independent directors on the board of COSCO Shipping Holdings and each of them has a different set of qualifications, experiences and insights that add value to the board and corporate governance. Most of our board committees, including the compensation, strategy, audit and nominating committees, are chaired by independent directors’.
Dr Guo also welcomes the Institute’s addition of the Chartered Governance Professional (CGP) designation to the existing Chartered Secretary (CS) designation to enhance recognition of company secretaries as governance professionals. Members with the CS/CGP designation possess a broad skill set across law, finance, governance, regulation, risk, strategy and boardroom dynamics enabling them to work across sectors, as well as internationally, says Dr Guo.
Ms Ma Jinru
Ms Ma Jinru FCIS FCS is the Deputy General Manager and Board Secretary of Xinjiang Goldwind Science & Technology Co Ltd (Goldwind). Goldwind is one of China’s earliest wind turbine manufacturers in the wind power industry and its new installation capacity ranks first in China and second in the world. Goldwind is listed on the HKSE (stock code: 02208) and the Shenzhen Stock Exchange (stock code: 002202).
‘As with our industry peers, we are committed to maintaining high standards of corporate governance while optimising management and internal controls to safeguard shareholder interests. But unlike other energy firms, which are usually state-owned, our shareholder base is quite diversified. We don’t have any controlling shareholders or actual controllers,’ Ms Ma says.
The board of Goldwind comprises of nine directors, which includes three executive directors, three non-executive directors and three independent non-executive directors. ‘Our board is well diversified in terms of professional background, industry experience, educational background, cultural background, skills, age and gender, among other aspects. The composition is conducive to making good operational decisions and improves the effective direction of the company,’ she adds.
‘Our chairman is open to the advice given by our independent directors. The current board is now in its seventh session. The term of office of the seventh session began in June 2019, with a term of three years.’
As every company is unique, establishing a corporate governance system that facilitates the flow of information and promotes decision-making across all levels of the company is vital not only to meeting compliance requirements but also ensuring the company has the ability to understand, identify and manage risks. To do so, it is important to maintain a robust communication system that ensures that the decision-makers in the company receive the information they need.
Mainland listed companies are also required to have a supervisory committee, Ms Ma points out. The key responsibility of a supervisory committee is to monitor the activities of the board and senior management, as well as to monitor financial affairs and business activities on behalf of shareholders.
Ms Ma also mentions Hong Kong’s principles-based regulatory framework which requires directors to make judgements. ‘In Hong Kong, I am often told to make a judgement based on the guiding principles provided, while Mainland regulators appear to be more willing to produce or provide case studies that we can make reference to as we see fit when, for example, considering what constitutes a connected transaction.’
Ms Ma also notes differences between the approaches of foreign and local investors, with the former paying more attention to the financial model and the implications of government policies for financial performance, while the latter often make decisions based on the overall situation of government policies and financial performance. ‘The policy direction relating to the wind power industry has been very clear recently. The central government aims to promote a revolution in energy production and consumption, and build an energy sector that is clean, low-carbon, safe and efficient. After setting the tone, there could be minor adjustments to policy details and technical measures, but I think these small changes don’t matter a lot to the industry or our business,’ she says.
Ms Ma welcomes the latest consultation, issued on 17 May 2019, by the HKSE regarding Hong Kong’s ‘ESG Reporting Guide’ and related listing rules. The Stock Exchange is committed, she points out, to improving ESG disclosure in Hong Kong, via encouraging listed issuers’ disclosure of ESG activities and metrics.
‘We are more than ready for more stringent requirements after this round of consultation. As a clean energy supplier, we not only work to create economic value for our shareholders, employees and the public, but also to fulfil our social responsibility. We do this in a number of ways, including reducing energy consumption and emissions of wind turbine component manufacturers; propelling the transformation of the wind power industry; assisting suppliers in saving energy and reducing emissions; and assisting the development of poverty-stricken areas in Xinjiang,’ she says.
Mr Ye Yumang
Mr Ye Yumang FCIS FCS is the Party Secretary and Deputy General Manager of COSCO Logistics (Shanghai) Co Ltd. Before 2013, he was the Company Secretary for China Shipping Container Lines Co Ltd. He has nearly 20 years’ extensive experience in corporate governance, risk management, compliance and IR. He has also been involved in a broad range of cross-border and domestic transactions, including initial public offererings (IPOs), project finance, debt issuances and corporate restructuring.
Mr Ye emphasises that board secretaries need to have wide knowledge and skills and be versatile enough to carry out functions in various areas like finance, accounting, legal administration and human resources. This is particularly true where a company goes public or carries out a spin-off. He points out that the management of an IPO often falls under the ambit of the board secretary and there are a lot of regulatory matters he or she will need to handle.
Mr Ye is very supportive of the Institute’s work. ‘For over 10 years, I have attended most events organised by the Institute whenever I had time. I learn something new every time, from regulatory updates to changes in the regulatory environment, like recent court judgments, regulatory guidance and upcoming changes. Case studies shared by senior members are particularly useful as they provide inspiration and insight into different approaches. I also find the visits to regulators such as the China Securities Regulatory Commission, the HKSE, the Securities and Futures Commission and other governmental organisations very useful,’ he adds.
Though he left the position of Company Secretary with China Shipping Container Lines in 2013, the knowledge he gained through taking part in the Institute’s activities remains useful and helps him perform his current duties as Party Secretary and Deputy General Manager for COSCO Logistics (Shanghai). Among other strategic planning duties, he is more focused on strategic human resources planning and risk management policy aligned with the company’s overall strategic objectives.
During pre-IPO roadshows, the board secretary’s ability to explain the company’s complex business to potential investors in layman’s language is critical to the success of the flotation, he says. ‘A lot of people ask how does this thing work, or how does it make money? A good board secretary should have the ability to simplify and express the complexity of a business in a way that’s not too complicated.’
He adds that the key IR role played by the board secretary can help the board answer difficult questions raised by investors. ‘When it comes to pitching to investors, think through all the potential questions they might ask. Put yourself in their shoes and you will realise why they have such questions. For questions that can’t be answered immediately, be honest that you don’t know the answer, but promise to reply via email and/or to call them back without hesitation. This is how trust and integrity are built over time.’
While communicating with regulators is certainly routine and required, it is important for the board secretary to master the arts of communication, delegation and engagement, Mr Ye adds. ‘Sometimes when you are informed of having broken certain rules, the regulator may have made an incorrect assessment because the personnel in charge do not understand the company’s situation. The board secretary must be well prepared to explain to the regulator what happened and how the situation can be resolved.’
Mr Ye also emphasises the need for board secretaries to be honest with regulators at all times. ‘From my experience, when dealing with Hong Kong regulators, room for negotiation is narrower perhaps due to the fact that Hong Kong’s regulatory environment is more stringent and more developed than the one in the Mainland, but whether you are in Hong Kong or the Mainland, we all know that honesty is the best policy.’
郭博士欢迎公会在现有“特许秘书”(CS)）专业资格以外增设Chartered Governance Professional（(CGP)）一衔，以增强公司秘书作为治理专业人士的认可。郭博士说，成员具备CS及CGP双重专业资格，代表其在法律、财务、治理、法规、风险、战略和董事会动态治理等方面拥有广泛技能，能于不同部门、全球范围内发挥所长。
叶宇芒先生FCIS FCS现任上海中远海运物流有限公司党委书记兼副总经理。 2013年前，他是中海集装箱运输股份有限公司的公司秘书。他在企业治理、风险管理、合规性和投资者关系管理等方面，拥有近20年的经验。此外，他曾参与国内外多项大型融资活动，包括IPO、项目融资、债务发行和公司重组等。