Summary of Key Takeaways from the Expert Call on China's Quasi-Stewardship Code Industry Overview - The discussion centers around the governance norms in China, particularly focusing on the newly introduced quasi-Stewardship Code and its implications for corporate governance in the country [7][9]. Core Points and Arguments 1. **Drivers Reshaping Governance Norms**: - China's governance norms are being reshaped by three primary drivers: strong regulation, state-owned enterprise (SOE) reforms, and increased investor activism [12]. - Regulatory bodies like the China Securities Regulatory Commission (CSRC) have intensified oversight, emphasizing dividend distribution and governance reform [8]. 2. **Quasi-Stewardship Code**: - The quasi-Stewardship Code, introduced in May 2025, mandates a 5% holding threshold for investor voting on key shareholder matters and requires annual disclosure of voting records [9]. - Non-compliance with the Code may lead to self-regulation or disciplinary actions [9]. 3. **Regulatory Reforms**: - The revised Company Law, effective July 2024, replaces supervisory boards with audit committees, introduces employee directors, and lowers the shareholder proposal threshold from 3% to 1% [10]. - The State Council's 'Nine Articles' further reinforce investor protection and market supervision [10]. 4. **ESG Disclosure Requirements**: - There is a growing emphasis on Environmental, Social, and Governance (ESG) disclosures, with central SOEs leading the charge. The ESG disclosure ratio increased significantly to 91% in 2024, up from 52% in 2021 [10]. 5. **Cultural Hurdles**: - While there has been an increase in shareholder proposals, the challenges faced are more cultural than technical, indicating a need for a shift in mindset among investors and companies [11]. 6. **Future Expectations**: - The governance reforms in China are expected to be execution-led over the next five years, with SOEs and central SOEs anticipated to show the most significant advancements [11]. - Index heavyweight companies are expected to lead in governance improvements, with a focus on linking executive KPIs to return on equity (ROE) and dividend payouts [11]. Other Important Insights - The increase in shareholder proposals has not yet been significant as of the first half of 2025, but there are attempts from investors to nominate independent directors in listed companies [11]. - The overall trajectory of governance reform in China is being shaped by a combination of regulatory changes, market dynamics, and evolving investor expectations [10][11].