Below are key takeaways from ISS’ recently released 2022 China Proxy Season Preview. The full report is available to institutional subscribers by logging into ProxyExchange 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.
- Increase of purchase of liability insurance: There was a surge in the number of proposals seen pertaining to the purchase of liability insurance for directors, supervisors, and senior management members by listed companies in 2021 subsequent to the release of the revised Securities Law of PRC. This is expected to continue in 2022, although still seen only for a minority of listed companies.
- Increase of ESG/CSR disclosure: Publicly listed companies in China showed a steady increase in ESG/CSR disclosure last year as investors’ awareness of ESG/CSR issues grew, in a trend expected to continue in 2022. However, ESG disclosure is done on a voluntary basis and is not yet a mandatory requirement for most publicly listed companies.
- Launch of Beijing Stock Exchange (BSE): In November 2021, the BSE was launched to support the financing of small and medium-sized innovative enterprises by allowing qualified enterprises to be listed and transferred directly to its board from the Select and Innovation Tiers of the National Equities Exchange and Quotations
- Special Action on Corporate Governance of Listed Companies (The Special Action): The China Securities Regulatory Commission has completed the first stage of the Special Action which aims to enhance the overall corporate governance practice of Chinese listed companies through a three-stage process of self-inspection, on-site inspection and rectification.
- Expected amendments to Company Law: A draft amendment of the Company Law has been under review by lawmakers. Proposed revisions to the Company Law are mainly aimed at deepening reforms of State-owned enterprises, enhancing the current corporate system and optimizing business operations, among others.
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By Rui Ning Cheng, Elodie Zeng, Yafei Zeng