Sunday, August 21, 2011

Head of Corporate Secretaries Int’l Assoc. Sees Converging Global Corporate Governance Practices

Speaking at a forum celebrating the 20th anniversary of the Chinese securities markets, April Chan, President of the Corporate Secretaries International Association said that, while corporate governance regulations differ in different legal systems, sound governance practices among international companies are becoming increasingly more reflective of each other. In remarks at the Shanghai Stock Exchange, she said that internal controls, an increasing regulatory focus on the non-financial section of financial reports, and integrated reporting covering corporate social responsibility and environmental concerns are some of the common cross-border themes affecting corporate governance. At the same time, she noted that the corporate secretary is assuming greater responsibility in implementing corporate governance practices, adding that Hong Kong regulators are preparing consultation documents on the role of the company secretary.

For her part, President Chan believes that, for all public companies, a foundation of sound corporate governance stems from the effectiveness of the board of directors and independent directors, and from information disclosure practices. She also noted that research shows that international institutional investors are willing to pay a
30 per cent premium to buy stock of companies with sound corporate governance.

Specifically, research conducted by the Shanghai Stock Exchange yields a similar result regarding investment biases of Qualified Foreign Institutional Investors when buying A-shares. However, Ms. Chan noted that it is hard to get an objective evaluation of corporate governance because different companies adopt different codes and standards. Further, the person responsible for corporate governance at a public company in different securities markets may have different qualifications and responsibilities.

Shanghai’s vision is to become an international financial center and nurture world-class enterprises that can compete globally. In President Chan’s view, a professional corporate secretary position is important for the advancement of China’s financial market, internal control mechanisms and the international expansion of enterprises. She pledged that the Association and The Hong Kong Institute of Chartered Secretaries will work with Chinese regulators to contribute to the growth of Chinese capital markets. They will offer knowledge and experience in corporate governance practices and a willingness to train corporate governance practitioners.