The Shanghai Stock Exchange (SSE) has recently finished the annual appraisal for secretaries to directorates of listed companies. Among the secretaries to directorates of 858 listed companies except the six who took the posts after May 1, 125 secretaries to directorates are appraised "excellent", 460 "good", 266 "qualified" and 7 "unqualified". Besides, the SSE also made a resignation appraisal for dozens of secretaries to directorates who left their posts.
It is the first annual appraisal for secretaries to directorates since the release of the "Measures on Qualification Management of Listed Companies' Secretaries to Directorates" and the "Measures on Appraisal of Listed Companies' Secretaries to Directorates" (two Measures) by the SSE. According to the appraisal procedures, each secretary to directorate on his or her post should submit their annual duty performance reports to the SSE at the beginning of May. The report should include such content as good-faith construction, information disclosure, corporate governance and equity management, as well as their assisting the senior management with compliance operation, receiving training and their proposals on regularized development of the securities market. Based on these reports, the SSE worked out the appraisal results by assessing each assignment of the secretaries to directorates in accordance with the conditions known from daily supervision and the opinions from relevant regulatory departments. The said reports, conditions and opinions will have different weights for finalizing the appraisal.
The appraisal results showed that the unqualified secretaries to directorates, though very few, failed the appraisal due to the following issues: they acted dishonestly in their information disclosure work; they failed to be due diligent in information disclosure, which resulted in poor disclosure; they were sloppy in giving aid to the senior management in compliance operation, turning a blind eye to the frequent illegal purchase and sale of stocks by the senior management; they were not able to file their annual duty performance reports on schedule.
The SSE will send letters to all the listed companies to inform their secretaries to directorates of their annual appraisal results. For the "good" and "qualified" ones, the SSE will give opinions and suggestions on further improvement of their work. And the "unqualified" ones should submit to the SSE their rectification plans.
The continuous improvement of the personal quality and the practice level of the secretaries to directorates of listed companies on the SSE over the past few years has propelled the regulated development of the listed companies. Insiders of the industry said that the secretary to directorate, the vital link for operation of a listed company, is the major channel of the company to communicate with the investors. Thus, the good-faith and professional ability of the secretary to directorate will have a direct influence on a listed company's governance level and disclosure quality as well as the investors' rights to learn the truth of the company. As the secretaries to directorates are being gradually transformed into professional managers, it is urgent to regulate their practices. According to the two Measures, an annual appraisal is required for each secretary to directorate of a listed company and a resignation appraisal for the one who leaves the post. Such an appraisal can urge the secretaries to directorates and the listed companies to continuously enhance their disclosure quality and governance level. In addition, it can also standardize the practices of secretaries to directorates and encourage them to further upgrade their profession level.
It should be pointed out that the appraisal results of the secretaries to directorates do not closely relate to the information disclosure quality of their listed companies. The appraisal pays more attention to the practices of the secretaries to directorates rather than the disclosure quality which is subject to several factors including the company condition, good-faith level of the senior management and internal control in addition to the practice level of secretaries to directorates.