Below are key takeaways from ISS’ recently released 2022 China Proxy Season Review. 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.
- ESG disclosures: Companies and investors have access to a standardized set of ESG metrics following the release of the Guidance for Enterprise ESG Disclosure by the China Enterprise Reform and Development Society in April 2022. Subsequently, the State-owned Assets Supervision and Administration Commission of the State Council revealed its work plan to require all central SOEs to engage in ESG reporting by 2023. Despite the fact that ESG disclosure is not yet a mandatory requirement for most publicly listed companies, increased ESG reporting is anticipated going forward.
- Board gender diversity: There is currently no regulation in China that requires the board of directors to have a minimum number of female directors. Chinese listed companies are perceived to have a male-dominated board structure with the average female representation on boards lingering at around 15 percent.
- Surge of Articles of Association amendments pertaining to Communist Party Committees: There was a surge in the number of proposals seen pertaining to the amendment to companies’ Articles of Association regarding the creation of Party Committees in the first half of 2022, subsequent to the release of the revised Guidelines for Articles of Association of Listed Companies. This is expected to continue in the second half of 2022.
- Introduction of “Small-scaled Rapid Financing”: The Measures for the Administration of Registration of Securities Offering by Companies Listed on the ChiNext/STAR Market came into effect in 2020. Companies listed on the ChiNext and the STAR Market can now raise funds more easily, with fewer requirements and simpler procedures. Although still an overall minority, companies seeking to take advantage of these simpler procedures increased sizably in 2022.
- Global Depository Receipts (GDRs) & China-Switzerland Stock Connect: there have been a number of proposals to issue GDRs on the SIX Swiss Exchange since the CSRC rolled out an overhaul of its Shanghai-London Stock Connect scheme and included Switzerland among its destinations due to the growing demand for such cross-border funding.
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By: Ada Xu, Yuan Yao, Rui Ning Cheng, Elodie Zeng, Yafei Zeng