Below is an excerpt from ISS’ recently released 2020 China Proxy Season Preview. The full report is available to institutional subscribers by logging into ISS Link then selecting the Governance Exchange and its Report Center tab and to corporate subscribers by logging into Governance Analytics then selecting the Governance Exchange and the Report Center tab.
In early 2020, the outbreak of COVID-19 in China affected various industries and caused business production, supply chain operations, and public transportation to be suspended. The market has witnessed some delays in audit work completion and the holding of shareholder meetings, owing to the precautionary measures required by the government such as the ban on large gatherings and travel restrictions. In anticipation of the delays, both the SSE and SZSE released notices allowing for the extension of information disclosure deadlines including:
- Listed companies may apply for an extension until April 30, 2020 if they are unable to disclose their 2019 annual report on time as a result of the virus outbreak.
- Listed companies including those listed on the STAR Market, may apply for an extension if they are unable to disclose their earnings forecast and preliminary financial results by end of January 2020 and end of February 2020, respectively, as a result of the virus outbreak.
- Listed companies which are awaiting an M&As preparation process, may apply for a one-month extension if they are unable to release financial materials or shareholder meeting notices in a timely manner as a result of the virus outbreak. A maximum of three extensions is allowed.
As of March 5, 2020, more than 60 companies with scheduled EGMs in the first quarter of 2020 have postponed their meeting dates while many listed companies have also scheduled their AGMs at later dates compared with their historical AGM dates. Therefore, compared with the shareholder meeting distribution in previous years, the 2020 meeting distribution is expected to have a larger kurtosis.
By Johnny Xing, Son Eng Lim, Zhihan Guo, Elaine Zhu; ISS China Research