Corporate Governance Conference (CGC) 2016 The Mainland and CG Tell - - PowerPoint PPT Presentation

Corporate Governance Conference (CGC) 2016

Speaker : Edward K F Chow JP, BA, FCA, FCPA, FHKIoD 24 September 2016

The Mainland and CG – Tell it straight The Road Trodden and What the Future Holds ?

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Fast Rewind

• CSRC / SSE / “A” shares / “H” shares
• Supervisory committee / INEDs
• Two tier board - duplication ?
• Supervisory board vs audit committee
• Professionalisation of INEDs

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• IFRS – Convergence or equivalence
• Basle I, II, III, Stress tests
• AML, KYC, EU directives / standards
• Risk, fraud, CSR, sustainability
• Related party transactions

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• G20, G2
• AIIB, Belt & Road
• BIG Banks, shipping, telecom, trains
• Tencent, Alibaba
• Rmb based trading

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FUTURE - WHAT FUTURE ?

• Over-regulation
• Compliance vs performance
• Single tier or two tier board
• Transferability of top management
• Go West or take lead to develop China centric framework?
• Educating private sector entrepreneurs
• Should regulators and drafters have commercial experience ?

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Q & A

Thank You !

Making it all come together Chinese style?

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• Relatively weak awareness in the Mainland
• Weak in two senses:

(1) unfamiliar with rules, regulations and laws (2) incomplete implementation of internal policies

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• Connected transactions
• unaware of the connected persons or the transactions
• overlooking the necessary approval and disclosure obligations
• Inside information
• insensitive to the potential corporate actions
• inappropriate communication channels leading to failure to preserve

confidentiality

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Example 1 – directors’ failure to obtain the necessary approval on connected transactions and failure to comply with the necessary disclosure obligation Example 2 - using mobile apps by the company’s management to discuss matters containing sensitive information

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Sep to Oct 2013 Oct 2013 Oct 2013 Oct 2013

During National Day - Golden Week Holiday (Peak seasons for Mainland properties transaction ) Last day of National Day - Golden Week Holiday

Trading halt After National Day - Golden Week Holiday (first trading day )

Trading halt for half day

Substantial family members acquire 8.1 million shares of the Company, price per share is $4.939

The President announced through several Wechat group:  Subscription accumulated to

• ver 100 billion

 Subscription attained 18.5 billion  Attained sales target in advance  Sales for single month attained 20 billion  Sales subscription attained 9.83 billion

Messages leaked to the Media, share price increased to $5.2 by 3% in the afternoon, closing price is $5.14 Made clarification announcement, trading resumed in the afternoon

Price sensitive information Suspected insider dealings The above information is not publised and the public have no way to acquire such information The individual obtain profit in the stock market before the public know the such information

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Share price rose to a high rate temporarily and dropped

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 Management’s professionalism to enforce the CG policies  Providing regular training and update to board members,

management and relevant staff

 Seek professional advice from company secretary or consultants

in case of uncertainty

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