On Improving The Quality Of Listed Companies From The Perspective Of Regulating Corporate Governance

In recent years, the problems of listed companies, such as the quality of securities and pledge, have become the root cause of the problems, such as the quality of listed companies and the quality of securities.

Recently, the first article of the opinions on further improving the quality of listed companies (hereinafter referred to as the opinions) issued by the State Council is to standardize corporate governance and improve the governance level of listed companies. A few days ago, the CSRC held a mobilization and deployment meeting to implement the "opinions", and further proposed to comprehensively launch the special action of corporate governance of listed companies. Taking special actions as the starting point, improving the level of governance and promoting the standardized operation have become an important basis for improving the quality of listed companies.

How to achieve "good" corporate governance

Talking about the function of corporate governance, whether in theory or practice, is an enduring hot topic. The discussion in the theoretical circle generally begins with the principal-agent problem derived from the modern enterprise system, and gradually develops to today's multi-dimensional quantitative indicators to measure the level of corporate governance. The practice of the practical circle mainly focuses on the traditional structure of "three meetings and one layer", the replacement of control rights, and attempts to explore the improvement of governance efficiency, the improvement of restriction mechanism, and the effectiveness of internal control mechanism.

However, as a common topic, what is corporate governance, what problems should be solved, and how to solve the problem mechanism are vague and specious to many "key minority" groups of actual controllers and directors and supervisors of listed companies, which has become a term of "familiar and unfamiliar". In other words, in many scenarios, the slogan of corporate governance is loud, but the specific practice is feeble. As the saying goes, words are not written, and actions are not far away. If there is no deep understanding of corporate governance, corporate governance may be "similar in shape but not in God", and improving the quality of listed companies will become an empty talk.

The power of corporate supervision comes from external intervention, the power of corporate management comes from market regulation, and corporate governance is a set of internal and external checks and balances system formed on the basis of these two forces. -Photo by Gan Jun

So, how to understand corporate governance and how to achieve "good" corporate governance can be seen from the following aspects.

The role of corporate governance. Different from corporate supervision and corporate management, the former is based on responsibilities and rules, while the latter is based on efficiency and interests, while corporate governance is based on checks and balances and control. The power of corporate supervision comes from external intervention, the power of corporate management comes from market regulation, and corporate governance is a set of internal and external checks and balances system formed on the basis of these two forces. Corporate governance is neither a regulatory framework that can be changed at one command, nor a functional system that can be effectively formed in complex markets. Corporate governance is not born out of the company's supervision or management. Its mission is not only to meet the compliance requirements, but also a complete set of internal and external control and balance system. Only when this set of control and balance mechanism plays its endogenous role, can we effectively avoid internal control imbalance, governance disorder and related derivative behaviors. This is why, despite the continuous improvement of the relevant regulatory system and the continuous strengthening of supervision, it is impossible to completely eliminate illegal acts. The key lies in the failure of the check and balance mechanism.

The thinking of corporate governance. At present, there are two misunderstandings about corporate governance. One is that corporate governance is regarded as regulatory compliance requirements, that is, it only needs to meet the minimum requirements of regulatory authorities for corporate governance and do a good job of superficial work. This is also the root cause of the low quality of corporate governance mechanism and insufficient information disclosure. The other is to hold a negative attitude and think that the characteristics of high ownership concentration and "one share dominating" determine that it needs a long-term process to improve the corporate governance system, such as the "vase theory" of independent directors. This view ignores the subjective initiative of the "key minority". In fact, the equity concentration in the capital markets of Sweden, Italy, Austria and other European countries is also relatively high. The founder families of large companies such as Amazon, Tesla and Facebook in the United States also hold a high proportion of voting rights. The reason for the governance failure is not the ownership structure characteristics that cannot be changed in a short period of time, but whether there is a soil that can nurture effective checks and balances mechanism. Therefore, we should get rid of the misunderstanding and make good use of the corporate governance mechanism to make it a powerful tool rather than a burden or a chicken rib.

The practical path of corporate governance. After nearly 30 years of practice, China's listed companies have formed a relatively mature "three boards and one layer" governance structure. However, insider control phenomena such as board of directors "one word hall", "board of supervisors" supervision "and shareholders' meeting becoming" large shareholders' meeting "are common. The reason lies in the low transparency of the operation of the "three meetings and one layer" governance structure and the lack of effective supervision and balance. In addition, the general low attendance rate of shareholders' meetings also reflects that investors in A-share market are not keen on exercising their shareholders' rights and are accustomed to voting with their feet. Especially, institutional investors, as one of the important external governance mechanisms, to a certain extent show the characteristics of "retail investors", which leads to the lack of enthusiasm of shareholders, and the shareholders' meeting becomes the "monologue" of major shareholders. As a matter of fact, with the continuous activity of equity transactions such as merger and reorganization, mixed reform and bail-out, the current equity concentration of listed companies has been reduced year by year. It is not only on paper to form an effective supervision and balance between the major shareholders and the management by the small and medium shareholders. Therefore, whether internal or external governance, there is room for further improvement in practice to form a broad joint force and improve the long-term mechanism.

Action for special purpose

This time, the "opinions" clearly put forward the need to carry out special corporate governance actions, and the CSRC once again stressed the need to effectively improve the level of corporate governance through various ways such as company self-examination, on-site inspection, and supervision and rectification, with the intention of enabling listed companies, controlling shareholders, actual controllers, directors, supervisors and investors to become stakeholders, rely on each other and put them into common get some action.

Accordingly, the regulatory authorities are also required to constantly improve the basic system, around the guidance and supervision to form a set of effective corporate governance constraint mechanism that is in line with the national conditions and market conditions, adapt to the reality of listed companies, and present investors with a real, standardized and transparent listed company.

In recent years, based on the practice of front-line supervision, Shenzhen Stock Exchange has been deeply engaged in promoting the "two wheel drive" of information disclosure and corporate governance. In 2010, a volume of standardized operation guidelines for listed companies was formulated and issued. As the most important regulatory rule in addition to listing rules under the system of self regulatory rules, it aims to standardize the organizational behavior of listed companies, focus on the "key minority" behaviors of actual controllers, controlling shareholders, directors, supervisors and senior executives, and guide the establishment of a standardized governance structure and a sound internal control system. With the changes of market environment and regulatory requirements, it has been updated and iterated to the third edition. In addition, in June this year, it issued the punishment standards for the illegal behaviors of listed companies, such as illegal guarantee and fund occupation, to further strengthen the identification and punishment of "key minority" responsibilities. As a necessary regulatory and restraint mechanism, it has an effective deterrent effect and warning effect on the illegal behaviors of "key minority" repeatedly prohibited in the current governance structure.

On the other hand, under the deployment of the CSRC, the Shenzhen Stock Exchange responded quickly and formed a special work arrangement for implementing the opinions. For example, it is required that the company of Zhejiang Province and city should be responsible for the company's "on-the-spot action" of "going to Beijing, Zhejiang Province and city" to carry out "on-the-spot operation plan" of "the company going to Beijing, Zhejiang Province and city" and "on-the-spot action plan", such as "the company going to Beijing, Zhejiang Province and city" will take charge of the company's "on-the-spot action plan" of "going to Beijing. Among them, improving the level of corporate governance, as the primary content of the "opinions", has become the focus of the action of listed companies. How to strengthen the risk management and control and control the "cross-border hand" under the situation of high proportion of large shareholders' pledge or tight capital chain? How to play the role of independent board of directors? Under the current policy, how to make good use of equity incentive, employee stock ownership and other institutional tools to strengthen incentive and restraint, and pass on the "best practice" of corporate governance? Under the increasingly popular equity culture, how to do a good job in investor relationship management and effectively play a positive shareholder governance decision-making mechanism? In depth discussion of these topics will be an important breakthrough point for the visiting team and the "key minority" groups of listed companies face to face and do a good job in the promotion service of "one company, one policy".

With the improvement of market maturity, the market participants' understanding of the rich connotation of corporate governance is deepening. Through the consensus and joint action among market participants, regulators, corporate managers and managers, the foundation of corporate governance will be effectively consolidated, so that the listed company groups can continuously review and summarize their own enterprise ecological mechanism construction, and continuously improve and perfect the system of board of directors and supervisors, internal control system, information disclosure quality and investor relations in the process of practice The key elements of management are to build a long-term mechanism of corporate governance, and then form a new pattern of improving the quality of listed companies.

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