CM BANK (CM BANK) is set to expand its board of directors from 13 to 17 members.
On May 28th, the bank's 13th board of directors held its 16th meeting, nominating four new directors in one go. The nominees include two non-executive directors, Li Yungui and Huo Da, one independent director, Zhang Yong, and the proposed new president of CM BANK, Wang Xiaoqing, as an executive director. Upon approval of the relevant qualifications, the number of non-executive, independent non-executive, and executive directors at CM BANK will increase to nine, six, and two, respectively.
As a prominent joint-stock bank, the composition of CM BANK's board draws significant attention. Previously, media reports highlighted that one of the newly nominated non-executive directors, Huo Da, had received a warning letter from the Shenzhen Securities Regulatory Bureau. The case stemmed from his tenure as chairman of China Merchants Securities, during which several employees were found to have engaged in illegal activities such as long-term stock trading using others' accounts, privately accepting client orders for stock trading, and entrusting others to trade stocks. These issues reflected inadequate compliance and internal control management at the company. As the chairman at the time, Huo Da bore management responsibility for these problems, leading to the issuance of the warning letter.
In response, CM BANK provided an explanation in its nomination announcement: "Given that this warning letter constitutes a regulatory measure taken by the Shenzhen Securities Regulatory Bureau and does not amount to an administrative penalty, market entry ban, or other circumstances deemed as rendering a person unsuitable to serve as a director of a listed company under Chinese mainland laws, regulations, rules, or regulatory provisions, it does not affect his qualification to serve as a director of a listed company. Therefore, this warning letter does not impact Mr. Huo Da's qualification and suitability to serve as a non-executive director of our company."
Public information shows that Huo Da has worked within the China Merchants Group system for many years. He currently serves as the Party Committee Secretary of China Merchants Financial Holdings Co., Ltd. (at the group director level). Starting in May 2017, he successively held the positions of Party Committee Secretary, Chairman, and Acting President of China Merchants Securities. The other newly nominated non-executive director, Li Yungui, also hails from a large state-owned enterprise, currently serving as the Chief Accountant of China COSCO Shipping Corporation Limited.
Apart from non-executive director Huo Da, the sole independent director nominated this time, Zhang Yong, appears to have been mistakenly identified. Some online media reports suggested that CM BANK's nominated independent director, Zhang Yong, had also received a warning letter due to regulatory violations, including "failure to promptly perform information disclosure obligations for significant matter progress," during his tenure as a responsible person at Devotion Health. However, upon verification, the Zhang Yong associated with Devotion Health is not the same person as the Zhang Yong nominated for CM BANK's independent directorship. The public discussion stems from a case of mistaken identity.
Information indicates that the Zhang Yong nominated for CM BANK's independent directorship has long been engaged in research and teaching within the financial sector, representing a professional talent integrating government, academia, and business. His previous roles include Director of the Policy Research Bureau for the China (Shanghai) Pilot Free Trade Zone Administration Committee, Board Secretary and Audit Responsible Person at Minsheng Life Insurance, Chief Expert and Dean of the Silk Road Research Institute (Haikou) Co., Ltd., and Vice Dean of the Shanghai Advanced Institute of Finance at Shanghai Jiao Tong University. He currently serves as the Executive Dean of the Dishui Lake Research Institute and Vice Dean of the Dishui Lake Advanced Institute of Finance at Shanghai University of Finance and Economics.
In contrast, the nomination of Wang Xiaoqing, the proposed new president of CM BANK, as an executive director follows the bank's常规流程常规流程 for management appointments. On April 30th, CM BANK announced that Wang Liang had resigned from his positions as executive director and president due to age. On the same day, the board reviewed and approved the appointment of Wang Xiaoqing as president, with the term to take effect upon regulatory approval of his qualifications. From the date of the board's approval, Wang Xiaoqing began acting as president until his official term commences. His current nomination as an executive director is a logical continuation of this appointment process.
Generally, when a commercial bank's president joins the board as an executive director, it facilitates direct management participation in strategic decision-making and enhances the efficiency of board decisions and their execution. Currently, Zhong Desheng, Deputy Party Secretary of the Head Office, is the only serving executive director at CM BANK.
The rationale behind CM BANK's nominations for non-executive, executive, and independent directors can be glimpsed from its annual report. Non-executive directors are typically senior management figures from large state-owned enterprises, such as chairpersons, general managers, deputy general managers, and experts in capital and financial management. Executive directors possess extensive professional experience, having long been engaged in financial management work. Independent non-executive directors include experts in finance, accounting, and banking, university professors, as well as financial and legal experts with international perspectives, who possess a deep understanding of the development of the banking industry both domestically and abroad.
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