Below are key takeaways from ISS’ recently released 2023 Proxy Season Preview – China. 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.
- Incorporations of Organizations of the Chinese Communist Party: A Surge of companies’ articles amendments with respect to the incorporations of organizations of the Chinese Communist Party (CCP) were evidenced in 2022, including Party Committees and Party Organizations, raising potential conflict of interests.
- Expanded Iocations for issuing Global Depository Receipts: Increased number of meeting proposals showed Chinese companies are considering expanding issuing locations in Europe for Global Depository Receipts (“GDRs”) with aims to diversify shareholding structures and to attract foreign capitals following amended CSRC guidelines.
- Development of ESG reporting: Chinese authorities have strengthened their efforts to promote more detailed ESG reporting requirements followed the amended CSRC guidelines in June 2021. Approximately 29.2 percent listed companies in China had disclosed non-financial reports, including ESG reports, social responsibility reports, and sustainable development reports as of October 2022, compared to 24.9 percent in 2021. Increased non-financial reporting is anticipated in 2023 and the future.
- Adoption of Registration-based listing system: The adoption of a registration-based system for initial public offerings on the main boards of Chinese stock exchanges on Feb. 17, 2023 aims to remove hurdles, speed up IPO process and potentially attract further companies to list on mainland stock exchanges.
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By: Ada Lu, Elodie Zeng, Frances Wang, Rui Ning Cheng, Xiao Xie, Yao Yuan