Key News Stories
The 2016 Proxy Season So Far
As we have approached mid-2016, most Asia markets except for India and Australia have concluded their annual general meeting (AGM) season. ISS Corporate Solutions (ICS) would like to share with you the observations and insights we have drawn from the data collected from this past proxy season, to give you a more comprehensive view of the corporate governance landscape in the region.
China: A-shares Inclusion into the MSCI Emerging Market Index
For the third time, MSCI delayed the inclusion of China A-shares into its MSCI Emerging Markets Index, citing openness, transparency, and accessibility as key concerns. While China has implemented regulatory changes to address MSCI’s prior concerns, including the quota allocation process, capital repatriation, and beneficial ownership of investment, the effectiveness of these recent regulatory changes is yet to be assessed. MSCI however is open to a potential off-cycle inclusion provided further significant positive developments occur ahead of the next review in June 2017.
During this past proxy season, the China meeting volumes under the ISS coverage increased by roughly 65 percent. With the potential MSCI inclusion, foreign institutional investors will further increase their holdings of China A-shares. Currently, poor corporate governance is amongst the top concerns for many foreign institutional investors to enter the market. Companies with decent disclosure practices and staying distant from abusive related party transactions would most likely give confidence to global investors.
With a growing business need in the Asia Pacific region, ISS Corporate Solutions has opened our fourth office in Sydney, Australia, to be headed by Ben Magarik as the Regional Director for Australia and New Zealand. The opening represents an important milestone in the company’s expansion in the region and will allow us to leverage our expertise to help companies improve their Corporate Governance practices and disclosures.
“The new office represents our commitment to providing unparalleled Corporate Governance data, analytics and advisory solutions to a strategically important region” said Joanne Adams, Head of Strategy and Business Development. “Ben Magarik, who previously led the ISS Corporate Solutions presence in Canada, has experience working closely with company secretaries, directors, investor relations officers, and senior executives on remuneration practice and disclosure, corporate governance benchmarking, and corporate sustainability reporting. We have ambitious plans for the region, and are confident that we will continue to exceed client expectations under Ben’s leadership”
Key Takeaways from the Korea Proxy Season
The following are the key takeaways that we observed from this past Korea proxy season:
- High meeting concentration remains consistent, with 99 percent of AGMs held in March;
- KRX announced that it will promote English disclosure which will enable foreign investors to gain better access to corporate filings and facilitate foreign investment;
- The Act on Corporate Governance for Financial Institutions will become effective from Aug. 1, 2016. The new Act shall be applicable to all companies within the financial industry, with slight differences based on sectors and asset size. The enforcement decree specifying the details is scheduled to be finalized prior to the enactment in August; and
- A newly amended Code of Best Practices for Corporate Governance is scheduled to be introduced this year. The amendment will be finalized by June 2016, and a full English version of the new Code will also be available by the end of this year.