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Expect more proposals on ESG issues in China, as reforms unleash minority shareholder activism, Allianz GI says

  • Under revised company law, the minimum ownership threshold for submitting resolutions at shareholder meetings will be lowered from 3 per cent to 1 per cent from July 1
  • The impact of a revised law on activities will start being felt in the 2025 voting season, Allianz GI stewardship analyst says

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The Lujiazui Financial District in Shanghai. The reforms, together with a CSRC action plan, will allow many more minority shareholders to put forward proposals to be voted on by all shareholders, Allianz GI’s Liu says. Photo: Bloomberg
Eric Ng
The mainland Chinese stock market is poised to see the emergence of shareholder resolutions on environment and social issues next year, as incoming corporate governance reforms start allowing many more minority owners to present proposals for voting, a stewardship expert said.
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Many institutional investors – previously constrained by a shareholding threshold for submitting resolutions – have just over a year to prepare for a new opportunity to escalate their stewardship activities, said Chris Liu Jianyuan, a stewardship analyst at Allianz Global Investors (Allianz GI).

“Since the annual general meetings season ends in June – the revised law will come into effect just after that – the impact on activities will start being felt in the 2025 voting season,” Liu told the Post.

Under the mainland’s revised company law enacted in December, from July 1, the minimum ownership threshold for submitting shareholder resolutions to be voted on at shareholder meetings will be lowered from 3 per cent to 1 per cent.

The move, together with the China Securities Regulatory Commission’s (CSRC’s) 2022-25 action plan to enhance listed companies’ governance, will allow many more minority shareholders to put forward proposals to be voted on by all shareholders.

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However, as the law stipulates that a board has the right to reject resolutions it deems to be outside the remit of a shareholder meeting, or in contravention of laws and regulations, or the provisions of a company’s articles of association, the impact of resolutions will be subject to individual boards’ execution of power.

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