A company secretary who sits on 33 local boards? It’s time Hong Kong regulators stop enabling puppet overseers
Name a profession that allows you to take up a dozen full-time jobs on top of two dozen part-time ones.
Nope, it is not dish-washing or delivery of wanton noodles.
Be a company secretary of listed companies in Hong Kong, you can have a very rewarding moonlighting life despite a term that sounds demanding on paper.
You have to “support the Chairman in promoting the highest standards of corporate governance”, said the Hong Kong Exchange. That is ensuring compliance by each and every director as well as updating them on regulatory change.
Regulators find these so important that only the board can appoint and remove a company secretary and the decision be publicly announced with details.
Many don’t find these over-taxing obligations.
Mok Ming-wai is one. The 48-year-old chartered company secretary is serving 33 boards. Maurice Ngai, the immediate past president of the Institute of Chartered Secretaries, has 13. That is on top of 12 independent directorships.
They are not alone. A causal search by Money Matters on the job list of ten company secretaries found half of them serving more than seven boards.
Most of their commitments are working as joint company secretaries with mainlanders who are not qualified under the existing regulation.
Mok does that for 22 mainland firms while Ngai has nine.
Demand for this service is hot, thanks to the lax regulatory control.
In the old days, only chartered secretaries, accountants and lawyers in Hong Kong could do the job. But the listing of state-owned enterprises in Hong Kong in 1993 opened a crack.
State firms do have company secretaries. The problem is they are Party cadres appointed not for their professional qualifications; don’t take care of corporate governance; and don’t live in Hong Kong.
They can be Party disciplinary officials, chemists, engineers or economists.
The regulators granted them waiver on the condition that the company hire a qualified person from Hong Kong to work together with the mainland secretary.
As years went by, the crack widened. Private enterprises from the mainland are excused, as are those operating from overseas.
This is despite the fact that they don’t share the political hurdle of SOEs in choosing their company secretary.
What started as an exception become a norm. Tell the regulators you are not operating in Hong Kong, the waiver is almost automatic.
Given the choice, most controlling shareholders would understandably prefer to have a loyal corporate insider “promoting” governance at home; instead of a pair of expensive and watchful eyes.
No wonder “part-time” company secretary are so sought after.
The question is how much time can people like Mok and Ngai spare for each company on their long client list?
How much can minority shareholders rely on these officials who are paid a fraction; give a tiny fraction of their time, and works thousands of miles away from the business?
Some would swallow this as a compromise. They say stringent requirements would turn away issuers.
Let us assume this pragmatic concern is true. That, however, cannot justify the “Midas touch” of those joint secretaries from Hong Kong.
Regulators allows you with whatever background to become a qualified company secretary after partnering with one for three years. That is what they call “relevant experience”.
Among those qualified by coaching was mainland engineer Song Yu-hong. Mok coached her on top of her dozens of “students” .
State-owned Huaneng Renewable Energy appointed the pair joint company secretaries for three years to get a waiver during its 2011 public offering.
When the term expired in 2014, the company said Song should go solo because “she has discharged her duties with the assistance of Mok and acquired a good understanding of the Listing Rules”. The exchange approved its application within two weeks.
Theoretically, Song can now work for any listed company of Hong Kong. Many others have followed her path.
These activities are ripe for ridicule.
Imagine the hard work put in by young people who spend tens of thousands dollars and years preparing for examinations with pass rates as low as 20 per cent, hoping to earn a decent pay.
It is also our regulators’ pledge to “uphold the highest standard of corporate governance” in a market where minority shareholders cannot resort to class action for protection.
Hong Kong don’t need another scandal to understand their importance.
An earlier version of this column carried a misspelling in reference to Maurice Ngai, the immediate past president of the Institute of Chartered Secretaries. The error has been corrected.