corporate governance, compliance and secretarial … 06 08 csia... · corporate governance,...

A proposal to the

From

For the Creation of a

New Separate Heading in the

Services Sectoral Classification List

To be Titled

Corporate Governance, Compliance and Secretarial Advisory Services

Supporting Organization

08 June 2012 Corporate Secretaries International Association

Contents

Page

1. Background

3

2. Proposition

3

3. Executive Summary

3

4. About CSIA

5

5. Why We Need this New Separate Heading in the Services Sectoral Classification List

6

6. Ten Compelling Reasons to Create this New Separate Heading

7

7. Corporate Secretaries: The Governance Professionals - Proposed Sub-Categories

8.

9

8. Corporate Secretaries: The Governance Professionals – Facts and Figures

- Facts and Statistics Demonstrating the Size, Significance and

Distinctiveness of this Profession

11

9. New Opportunities for International Growth in Trade in Services

13

Annexure I – Corporate Secretaries International Association (CSIA) Objects

15

Annexure II – Resolution Passed by the Council of CSIA during its meeting on 29 April 2011

16

Annexure III – Definitions of Corporate Governance - Definitions of Accounting Profession/Accountant and the Legal

Profession/Lawyer

18

Annexure IV – Sources Used for Figures and Statistics

20

Annexure V – Previous Correspondence and Resolutions of CSIA Members

22


1. Background:

On 29 April 2011 the Council of Corporate Secretaries International (CSIA) (for the objects of CSIA, see Annexure I) passed a resolution (for a full copy of the resolution, see Annexure II) that it would recommend and pursue the introduction in the World Trade Organization (WTO) Services Sectoral Classification List of a new separate heading with the proposed title of Corporate Governance, Compliance and Secretarial Advisory Services. This sector would be further divided into the following proposed sub-categories:

Corporate Governance Services, Core Value Assimilation and Implementation in

Business and Management Policy and Practices

Corporate Secretarial Services

Secretarial Audit and Compliance Audit Services

Certification Services

Corporate Advisory Services

2. Proposition:

The Council and members of CSIA respectfully request that the WTO create a new separate heading in its Services Sectoral Classification List with the proposed title of Corporate Governance, Compliance and Secretarial Advisory Services. Recognition of the distinct nature of these services by means of the new classification, in the opinion of the CSIA Council and its members, would result in a significant increase in trade in such services, facilitate the sharing of best practices globally and foster continuous improvement in global corporate governance standards and outcomes.

3. Executive Summary: Corporate Secretaries International Association (CSIA) is the international trade body of corporate secretaries and governance professionals; it is their global voice. It is also the organization through which member countries communicate and share best practices of corporate governance and facilitate the dissemination of training in good corporate governance practices to developing nations. CSIA currently has 18 national organisation members, which in the aggregate represent approximately 100,000 corporate secretaries and governance professionals in more than 70 countries throughout the world. It continues to grow rapidly. CSIA is asking the WTO to recognise the distinct nature of corporate secretarial and governance services and to facilitate CSIA’s goal of improving corporate governance services and practices throughout the world by creating a new separate heading in its Services Sectoral Classification List, with the proposed title of Corporate Governance, Compliance and Secretarial Advisory Services (CGCSAS). It is estimated that there are more than 250,000 people, in over 100 countries, currently employed in this proposed new sector, and that the services provided by these individuals represent (conservatively) more than US $36 billion of the world’s annual revenues.


Creation by the WTO of this proposed new sector would provide official international recognition of the distinct nature of corporate governance and corporate secretarial services and would produce the following positive results:

i) Increase global trade in corporate secretarial and governance services by

approximately US $1.5 billion in the first year post recognition; with greater

increases in following years;

ii) Improve corporate governance practices throughout the world through the sharing of best practices and the training of corporate secretaries and governance professionals in developing countries – which would also help combat money laundering and terrorist financing;

iii) Create new employment opportunities for corporate secretaries and governance professionals and support staff throughout the world;

iv) Facilitate the movement of labour within the sector, which will help foster best

corporate governance practices and procedures globally;

v) Benchmark compliance and corporate governance costs globally;

vi) Reduce global corporate compliance costs due to increased competition;

vii) Improve the availability, choice, scope and quality of corporate governance, compliance and secretarial advisory services;

viii) Help with trade dispute resolution, through increased standardisation and like-for-

like governance practices and job function/recognition;

ix) Provide a focal point for corporate governance within each organisation (currently lacking in many corporations) in the form of the corporate secretary; and

x) Help rid the world of inadequate and sub-standard corporate governance

practices, policies and procedures (fragmented governance), which many consider to have been among the underlying causes of the current financial and economic crisis.

The WTO can help the world move beyond fragmented governance and transition to effective and economically sustaining corporate governance practices by approving this request to create a new separate heading in its Services Sectoral Classification List with the name of Corporate Governance, Compliance and Secretarial Advisory Services.


4. About CSIA

Launched at the World Bank Paris headquarters on 22 March 2010, CSIA is an international federation of professional bodies which promotes best practices in corporate governance, compliance and secretarial advisory services. Membership currently consists of 18 national representative organisations and continues to grow rapidly. It is recognised by the OECD as the global voice of corporate secretaries and governance professionals and its representatives sit on the OECD corporate governance roundtables. The OECD and the Global Corporate Governance Forum (a World Bank/International Finance Corporation initiative) are Supporting Organisations of CSIA.

All CSIA members share a common interest in the promotion of good governance practices and enhancing the profile of the professionals that underpin its practice who serve as corporate secretaries and other governance professionals. CSIA is also actively engaged in developing educational materials to train corporate secretaries in developing countries. Working together, CSIA represents approximately 100,000 corporate secretaries and governance professionals in more than 70 countries. As of May 11, 2012, the following countries are represented by organizational members of CSIA:

1. Australia 2. Bangladesh 3. Canada 4. Hong Kong/China 5. India 6. Indonesia 7. Kenya 8. Malaysia 9. Mongolia 10. New Zealand 11. Nigeria 12. Pakistan 13. Singapore 14. South Africa 15. Sri Lanka 16. United Kingdom 17. United States of America 18. Zimbabwe

CSIA recognises that governance professionals occupy a wide variety of roles within the private, public and not-for-profit sectors and from country to country have differing degrees of recognition. CSIA was formed to help member organisations better serve their members and their community’s governance needs (for CSIA objects please see Annexure I).


5. Why we need this new Heading in the Services Sectoral Classification List

The corporate sector universally recognizes that good corporate governance is necessary to ensure economic stability, sustainability and prosperity. To further the development of best practices in corporate governance worldwide, and to ensure that corporate secretaries can have one authoritative and coordinated global voice, professional organizations engaged in the continuous improvement of corporate governance practices in their own countries formed CSIA. Members of CSIA span the globe: the United Kingdom, USA, India, Australia, Hong Kong, Singapore, Malaysia, South Africa, Kenya, Nigeria, Singapore, Pakistan, Mongolia, Indonesia, New Zealand, Canada and various other countries.

We believe that there may be a general lack of understanding of the significance and unique expertise of the over 250,000 corporate secretaries and governance professionals working in nearly 100 countries across the globe. And yet, corporate governance is universally acclaimed as a necessary ingredient for sustainable businesses and economies. Indeed, the current financial crisis could be understood, at least in part, to have been caused by failures in corporate governance compared with, for example, the failures of Enron and WorldCom which, it has been argued1, were rooted in management malfeasance and fraud.

That good governance is critical in all areas of every business is undisputed. Many businesses, however, find many aspects of corporate governance unfamiliar, often neglecting them due to lack of understanding, rather than irrelevance or inadequate resources. This is expected as corporate governance is a discipline that is hard to define, measure or validate and is constantly evolving (for definitions of corporate governance, see Annexure III). Generally, it covers a wide range of specialties such as corporate structure management, board of director advisory services, legal and regulatory compliance, entity or subsidiary management, shareholder services and communications, business ethics, risk management and corporate social responsibility, as well as systems planning, implementation and administration. It involves a broad spectrum of skills and knowledge across every business function, and requires of its practitioners subtle skills such as interpersonal communications, diplomacy, objectivity and professional judgement. These are skills traditionally associated with the role of corporate secretary (also known as the board/company/chartered secretary). The recognition of a new sectoral heading, as requested, will provide formal recognition for what is already happening throughout the world – that corporate secretaries and governance professionals do take the lead on these very important issues within their own organizations. But more significantly, the recognition sought will facilitate important new trade flows by recognizing the increasing importance of this profession and aiding its growth, by facilitating the sharing of best practices and standardising them across the globe. In particular we believe that developing countries will benefit via the standardisation and reduction in the cost of compliance as well by facilitating dispute resolution through increased standardisation and like-for-like governance practices and job function/recognition. Consigning to history the fragmented elements of the current structure whereby governance professionals have limited recognition across various existing categories, a new engine of growth can be created that not only brings financial rewards in terms of more trade but also a general improvement in the global corporate governance standards, thereby improving the lives of millions of people. 1. Perspectives from the Boardroom, September 2009 Harvard Law School Forum Corporate Governance and Financial

Regulation; authors Prof. Jay Lorsch, Joseph L. Bower, Clayton S. Rose, Suraj Srinivasan. Quoted in Dr. Bob Tricker’s

research paper “Twenty Practical Steps to Better Corporate Governance, published by CSIA, March 2010.


We submit that a cost/benefit analysis of the proposed change which shows that recognition of the proposed new sectoral heading will facilitate new and more efficient trade flows, will help to improve governance standards and the sharing of best practices and will better connect corporate secretaries and governance professionals around the world. The benefits of the proposed change will far outweigh the costs. 6. Ten Compelling Reasons to Create this New Separate Heading

i. The creation of this new sector will encourage a free flow of corporate governance practices, processes and ideas. This will be aided by the movement of governance professions between jurisdictions which in turn will help standardise best governance practices and services via increased competition. This also holds true with regard to the official recognition of the governance professional. The transfer of knowledge between countries and jurisdictions will be encouraged and enhanced as governance professionals export and import their services. This will enable more advanced countries to share best practices and standards among themselves, and to help less developed countries learn about best practices and improve their governance standards.

ii. Official recognition of the corporate secretary and governance professional will help

companies and other organisations designate a focal point for corporate governance

within their organisation, in much the same way as an accountant (as a Financial

Director / Controller or CFO or similar) is widely understood to be in charge of

corporate financial matters. Although corporate governance is the responsibility of

everyone within an organisation (as is fiscal prudence) and especially the board of

directors, the creation of the proposed new category will provide commonality in the

designation of the corporate governance gatekeeper.

iii. Increased co-operation of like-for-like, officially recognised (and registered) firms

would (especially in the company services provider sector) increase the sharing of

effective controls and practices including the accuracy of corporate record keeping

and communications. This could prove helpful in the fight against money laundering

and counter terrorism financing (e.g. standardised suspicious transactions reports),

by making it easier for law enforcement and regulators to detect, investigate and

prosecute potential criminal or terrorist funding activity.

iv. An increase in the import and export of corporate secretarial and governance

services will increase trade in services internationally. Using historical data, one can

predict that business volume in the corporate governance, compliance and

secretarial services sector could increase between 5% and 10%, especially in the

trust and company services sectors. Using the conservative global gross revenue

figures given for the sector of US$36 billion, a 5% increase in business volume for

such services would equate to an annual increase of US$1.5 billion in revenues

produced by the sector the first year after its recognition.


The WTO estimated that the impact of the 1994 Uruguay Round trade deal added

between US$109 and US$510 billion to the world’s income (depending on

assumptions of the calculations and allowing for margins of error) and recent

research has produced similar figures. For example, economists estimate that

cutting trade barriers in agriculture, manufacturing and services by one third would

boost the world economy by approximately US$613 billion, which is the equivalent of

adding an economy the size of Canada (in 2008) to the world economy.

Trade boosts income, and the creation of new trade in services sector for Corporate Governance, Compliance and Secretarial Advisory Services would add to global income in excess of US$1.5 billion per annum and continue to increase year on year as new markets open up and mature, and so require increasingly sophisticated governance related services.

v. This new sector will help move towards standardised corporate governance practices

and principles and compliance costs, which should lead to an overall reduction in

corporate costs.

vi. The new sector will facilitate the process of Trade Dispute Reconciliation by clearly

defining the person/persons in charge of compliance and customer due diligence in

every company or organization.

vii. According to the WTO’s “Ten Benefits of the WTO Trading System”, published in

2008, increasing the amount of free trade reduces the cost of living. As reported in

this WTO report, a group of economists led by Robert Stern estimated that lowering

service barriers by one third would (under the Doha Development Agenda) raise

developing countries incomes by around US$60 billion. The proposed new sector will

reduce service barriers, increase free trade and help reduce the cost of living.

viii. Creating the proposed new sector will increase choice and provide a broader range

of service providers from which to choose. The creation of a new sector heading will

provide abundant opportunities for both importers and exporters of services in this

sector. It will also create the opportunity for international tie-ups and partnerships.

ix. Employment opportunities will be created as markets open up and/or require more

sophisticated services. Increasing demand for the services of corporate secretaries

and governance professionals will thus boost employment.

x. The proposed new sector will bring corporate governance services up to the same

standards as expected of other global services. It is difficult to remember that prior to

GATT and the WTO, countries had different sets of rules and different custom duty

rates for imports coming from other countries. Such differences are unthinkable in

today’s hyper-connected world. The creation of a new sector will provide for a

designated governance gatekeeper, enable greater standardization and improve

corporate governance globally and help rid the world of fragmented governance.


7. Corporate Secretaries – The Governance Professionals

CSIA proposes that the WTO incorporate five sub-headings in the proposed new Heading in the WTO Services Sectoral Classification List. These sub-headings and their definitions are:

a) CORPORATE GOVERNANCE SERVICES

This sub-heading would include all services relating to providing advice on good governance practices, sustainability and compliance with corporate governance norms or standards, as prescribed by the Companies Legislations, or Corporate, Securities and other legislation from any country, as applicable from time to time.

b) CORE VALUE ASSIMILATION AND ITS IMPLEMENTATION IN BUSINESS AND

MANAGEMENT POLICY AND PRACTICES

This sub-heading would include services related to value assimilation in the organization (such as communication of the organization’s vision and mission), identification of the core values of shareholders, boards and stakeholders, development of the framework for implementing the core values in business policies and practices and the issuance of the annual statement on the progress of value assimilation in the organization.

c) CORPORATE SECRETARIAL SERVICES

This sub-heading would include services relating to i) the promotion, formation and

incorporation of companies, subsidiaries and matters related to such entities; ii) the

preparation, filing and registering of corporate documents, including forms, returns and

applications by and on behalf of the company as an authorized representative; iii) the

maintenance of secretarial records, statutory books and registers; iv) the preparation

for meetings of the board of directors (and each of its committees) and general

meetings of the owners or shareholders (including the development of materials for

such meetings, and the preparation of draft minutes of the meetings); v) the

registration and transfer of shares of the company, including shareholder ownership

records and the payment of dividends, including compliance with listing standards and

all other statutory requirements. The corporate secretary ensures that timely

information is made available to relevant stakeholders and proper records are kept for

good governance purposes. The corporate secretary also provides in-house guidelines,

compliance manuals and ongoing training to help build a good governance culture

within each organisation.

d) SECRETARIAL AUDIT AND COMPLIANCE AUDIT SERVICES

This sub-heading would include services relating to statutory Secretarial Audits, Compliance Audits and other compliance activities required under company bylaws, applicable corporate and securities laws, regulations and guidelines, especially those required of members of the company secretaries/chartered secretaries and administrators profession.


e) CERTIFICATION SERVICES

This sub-heading would include all statutory certification services for which the members of the corporate secretaries/chartered secretaries and administrators professions are authorized.

f) CORPORATE ADVISORY SERVICES

This sub-heading would include services relating to the provision of advice or professional services to corporate management, including legal advice regarding the corporation’s duties and responsibilities under corporate bylaws or company legislation, as well as the corporate and securities laws of the applicable jurisdiction or those of other countries. These services could include:

Appearing as an authorized representative before quasi-judicial bodies and tribunals

Due diligence

Corporate restructuring

Foreign collaborations and joint ventures

Project planning

Shareholders agreement

Dispute resolution

Each of the above categories requires a range of skills that are on the whole possessed by professional corporate secretaries. While other professions (notably those of the accountants and lawyers, but also some business consultants) will possess some skills and knowledge and so be able to carry out some of the abovementioned functions, only professional corporate secretaries have the complete range of skills and knowledge necessary to be called corporate governance professionals.


8. Corporate Secretaries: The Governance Professionals – Facts and Figures

- Facts and Statistics Demonstrating the Size, Significance and Distinctiveness of

this Profession

CSIA estimates that there are over 250,000 people in more than 100 countries that are engaged in work that would fall under the proposed new sector heading of Corporate Governance, Compliance and Secretarial Advisory Services. This sector is worth in excess of US$36 billion per annum (see Table 1 below) in gross revenues. Table 1 – Remuneration & Gross Revenues

Region/Country Employment Nos.

Average Remuneration US$ per Person per Annum

Gross Revenue Estimate US$ Billions (Employees X Av. Annual Remuneration X 2)

Australia/NZ/Pacific Islands 10,000 $182,500 $3,650,000,000

North America:

Named Corp. Sec. 9,100 $275,000 $5,005,000,000

Support/Asst. Corp. Sec. 18,200 $100,000 $3,640,000,000

United Kingdom 30,000 $99,300 $5,958,000,000

Malaysia 15,000 $13,400 $402,000,000

Singapore 10,800 $29,100 $628,560,000

Hong Kong Named Corp. Sec. 1,628 $130,000 $423,280,000

Hong Kong Support/Asst. Corp. Sec. 3,256 $40,000 $260,480,000

Hong Kong Professional Company Service Firm 5,000 $50,000 $500,000,000

India 26,600 $25,250 $1,343,300,000

South Africa 1,000 $125,000 $250,000,000

Zimbabwe 1,200 $20,400 $48,960,000

EU + Switzerland* 112,000 $63,330 $14,185,920,000

Rest of World (not listed) - Russia, Ukraine, Central and South America** 10,000 $18,000 $360,000,000

TOTAL 253,784

$36,295,500,000

* EU + Switzerland Gross Revenue Estimate was calculated thus: The total population working in the CGCSAS sector in the UK (0.05%) divided by a factor of two (= 0.025%); X average EU salary X 2. **Estimated Figure

Businesses may have trouble identifying what constitutes good governance, but one can easily recognize the lack of it, and the harm caused by poor corporate governance is obvious, undeniable and serious. Driven by the increasing complexity of today’s business environment, the need for good corporate governance practices in support of key corporate decisions is clearer than ever before. It is the corporate secretary and governance professional who ensures that such standards, principle and practices are made, maintained and communicated, as required.


Corporations and other entities today are scrutinised and held accountable by a variety of stakeholders, including analysts, customers, shareholders, employees, lenders as well as special interest groups (e.g. environmental groups, health lobbyists, corporate governance organisations, the media, etc.). Many stakeholders are as interested in the way in which a company conducts business, as they are in its financial performance (which is largely the responsibility of the finance function with the accountant in the form of the CFO/Financial Director/Controller or similar being the identifiable person. Some businesses do not have a single person within their organisation who is responsible for defining and implementing good corporate governance practices. Although good governance is everyone’s responsibility, true accountability can only be attained if a single person is specifically charged with the responsibility of ensuring that good corporate governance standards are in place and practices are operating effectively. In companies in most developed countries, this role is already being played by the corporate secretary and governance professional. Indeed, the corporate secretary and governance professional is widely recognized as the gatekeeper of corporate governance throughout the world. The proposed creation of a new separate heading in the WTO Services Sectoral Classification List, with the proposed title of Corporate Governance, Compliance and Secretarial Advisory Services, would augment the WTO Sectoral Classifications to reflect what is already in place in much of the world and promote the further development of this role and good governance practices in developing countries. Recognition of the distinct nature of these services by means of the new classification, in the opinion of the CSIA Council and its members, would result in a significant increase in trade in such services, facilitate the sharing of best practices globally and foster continuous improvement in global corporate governance standards and outcomes. We appreciate the opportunity to present our views on this subject and respectfully request that this application be approved.


9. New Opportunities for international growth in Trade in Services

- Let’s be rid of fragmented governance By grouping together these services under one heading of the WTO, a whole world of new trading opportunities arise. Currently many countries use the WTO listings as their guide when negotiating trade agreements – especially Preferential Trade Agreements (PTA) – e.g. the Closer Economic Partnership Agreement (CEPA) between Hong Kong and mainland China. By excluding the entire business sector of Corporate Governance, Compliance and Secretarial Advisory Services the WTO is restricting the growth of business as well as the opportunity to spread good governance throughout the world. Because governance is more than procedures, systems and processes; the key to good governance is people, not procedures. Corporate secretaries – the governance professionals - play a key role in bringing knowledge and integrity in their advice to the board and company. As a custodian of sound business ethics and practices, corporate secretaries effectively guide businesses in their actions, and create the environment for more enlightened decisions and outcomes in many cases on a cross-border or global basis. As the circumstances surrounding a company and its business change, so do the parameters of good governance. A corporate secretary/governance professional can provide a reference point, as well as structured and tailored counsel to minimise problems and meet challenges presented by varied regulatory regimes. By defining the role and function of governance professionals via a new class heading of Corporate Governance, Compliance and Secretarial Advisory Services, the WTO will facilitate the bringing together of all facets of governance and thereby allow that co-ordinated focus to lead to improved trade and service flow outcomes as well as help ensure proper and timely compliance of various clauses as per the law of the concerned country. This in turn will provide good governance and also comfort to the independent directors on the board of the company as well as other stakeholders. In today’s world of fragmented governance there is a lack of focus and responsibility for governance. The consequences of this approach are reasons we now find ourselves where we are in the middle of a severe financial crisis. Surely this is an opportunity to help put things back on track and focus the attention of the business and political world on doing things properly? Every business decision has an element of uncertainty and carries a risk that can, in part, be managed through effective oversight and internal control. Keeping pace with the risks of business and other aspects of governance requires formal mechanisms that encourage enhanced board and management effectiveness. Corporate secretaries play an understated yet vital role in business. In their capacity as watchdog, facilitator and adviser to the board, corporate secretaries help to bring about the following:

Balance Corporate secretaries act as objective mediators, applying unbiased oversight on potential areas of conflict, interest and strategy. They facilitate board and management accountability to both the company and its shareholders.


Clarity Corporate secretaries cut through the paralysis of information and rules to help those in authority navigate potential legal, financial and administrative obstacles. Order Through their systems of risk management and internal compliance and control, codes of conduct, and legal compliance, corporate secretaries bring order and a more systematic approach to optimise meeting results, communications and decisions. Independent Voice Companies have a range of duties and other obligations to stakeholders such as shareholders, employees, clients/customers and the community as a whole. Corporate secretaries provide a conduit for this myriad of stakeholders to the board of directors while at the same time maintain a professional independence whilst advising the board how best to meet their demands.

We respectfully submit that it is time for the role of these professionals to be recognised. It is time that the Corporate Governance, Compliance and Secretarial Advisory Services sector is given its due recognition by the WTO. It is time to rid ourselves of fragmented governance. While difficult to define, good corporate governance is sorely missed and the consequences of its absence and a professional specifically charged with ensuring it, as we are now experiencing, can be catastrophic both for the business world and society at large. Therefore CSIA formally requests that the WTO agree to the creation of a new separate Heading in its Services Sectoral Classification List by the name of:

Corporate Governance, Compliance and Secretarial Advisory Services


ANNEXURE I CSIA Objects The objects of Corporate Secretaries International Association are:

To promote throughout the world the professional status of suitably qualified chartered secretaries, corporate secretaries, company secretaries, board secretaries, governance professionals and other professionals with similar specialist governance qualifications to the public, government, regulators, the business community and international organisations.

To establish and maintain throughout the world good relations and exchanges between organisations dedicated to the promotion and practice of secretaryship and/or the promotion of good governance which will enable and encourage the establishment of common aims and objectives to be pursued by chartered secretaries, corporate secretaries, company secretaries, board secretaries, governance professionals or similar other professionals who are practitioners as defined in Article 2.5.

To assist such organisations throughout the world to develop and improve their services and professionalism of their members.

To assist in the creation of such organisations in countries or regions in which they do not currently exist.

In relevant areas in both the private and public sectors:

To promote the growth, development, study and practice of secretaryship;

The promotion and advocacy of good governance;

To assist practitioners to develop and improve their services and professional standards;

To promote and carry out research into good governance and secretaryship.

To promote and recommend uniformity in governance standards.

To raise awareness and visibility and to actively promote in terms of recognition, influence and respect of secretaryship and its professional practitioners to national governments and their supplementary/sponsored organisations, international organisations and the global business community.


ANNEXURE II

RESOLUTION PASSED BY THE COUNCIL OF CORPORATE SECRETARIES INTERNATIONAL ASSOCIATION DURING ITS MEETING ON 29 APRIL 2011 “The Council noted with concern that the Corporate Governance, Compliance and Secretarial Advisory Services were nowhere recognized as a separate Heading in the Services Sectoral Classification List of the WTO. The Council unanimously resolved that the Company Secretaries/Chartered Secretaries/ Certified Secretaries and Administrators profession may recommend and pursue the introduction in the Services Sectoral Classification List of the WTO, the following new services namely: “CORPORATE GOVERNANCE, COMPLIANCE AND SECRETARIAL ADVISORY SERVICES • Corporate Governance Services • Core Value Assimilation and its Implementation in Business and Management Policy

and Practices • Corporate Secretarial Services • Secretarial Audit and Compliance Audit Services • Certification Services • Corporate Advisory Services

CORPORATE GOVERNANCE SERVICES This sub-Services sectoral Classification of the WTO to include all services relating to advising on good governance practices, sustainability and compliance of Corporate Governance norms as prescribed by the Companies Legislations of different countries, Corporate, Securities and other legislations of different countries for the time being in force. CORE VALUE ASSIMILATION AND ITS IMPLEMENTATION IN BUSINESS AND MANAGEMENT POLICY AND PRACTICES This sub-Services Sectoral Classification of the WTO to include discussion on the value assimilation in the organization, develop their Vision and Mission, discover core value meaningful to their shareholders, boards and stakeholders, design framework for implementing its core value in its business policy and practices and to issue annual statement on the progress of value assimilation in the organization CORPORATE SECRETARIAL SERVICES

This sub-Services Sectoral Classification of the WTO to include promotion, formation and

incorporation of companies and matters related therewith; filing, registering any document

including forms, returns and applications by and on behalf of the company as an authorized

representative; maintenance of secretarial records, statutory books and registers; arranging

board/general meetings and preparing draft minutes thereof and all work relating to shares

and their transfer and transmission including compliance to listing requirements and all

other statutory requirements.


SECRETARIAL AUDIT AND COMPLIANCE AUDIT SERVICES

This sub-Services Sectoral Classification of the WTO to include all statutory Secretarial Audits, Compliance Audits and Compliance under Company, corporate and Securities Laws including regulations and guidelines, by the members of the Company Secretaries/Chartered Secretaries and Administrators profession. CERTIFICATION SERVICES This sub- Services Sectoral Classification of the WTO to include all statutory certification services for which the members of the Company Secretaries/Chartered Secretaries and Administrators profession are authorized. CORPORATE ADVISORY SERVICES This sub-Services Sectoral Classification of the WTO to include services relating to: Advising Companies on management including any legal and procedural matters falling under Companies Legislations, Securities Laws and Corporate Laws of different countries.


Due diligence


Foreign Collaborations and Joint Ventures

Project Planning

Shareholders agreement

Dispute resolution


ANNEXURE III

Definitions of Corporate Governance Corporate Governance: There are as many definitions of corporate governance as there are leaves on a tree. The OECD defines corporate governance as:

“Procedures and processes according to which an organisation is directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among the different participants in the organisation – such as the board, managers, shareholders and other stakeholders – and lays down the rules and procedures for decision-making (European Central Bank, 2004, Annual Report, ECB Frankfurt, glossary, 13 July 2005).”

The Hong Kong Institute of Chartered Secretaries (HKICS) expands on the OECD definition and states in its corporate brochure that:

“The principle and structures of corporate governance support companies in their drive to create sustained value. It is much more than a series of codes of conduct and other documents. It is a state of mind, a pattern of practices that define a company’s culture. Corporate governance puts in place a system by which companies are directed and managed. It influences how the objectives of the company are set and achieved, how risk is monitored and assessed, and how performance is optimised.”

For an update on current definitions of CORPORATE GOVERNANCE - refer Corporate Governance Principles, Policies and Practices (Second Edition) by Bob Tricker 2012 Key features are: OPERATIONAL PERSPECTIVE - Cadbury Report 1992: “Corporate Governance is the system by which companies are directed and controlled” - OECD Code 2001”: Corporate Governance is about the procedures and processes according to which an organization is directed and controlled” RELATIONSHIP/STAKEHOLDER PERSPECTIVE - OECD Code 2001: “The corporate governance structure specifies the distribution of rights and responsibilities among the different participants – such as the board, managers, shareholders and other stakeholders - in the organization and lays down the rules and procedures for decision making". SOCIETAL PERSPECTIVE - Sir Adrian Cadbury 2000: “Corporate Governance is concerned with holding the balance between economic and social goals and between individual and communal goals. The aim is to align as nearly as possible the interests of individuals, corporations and society”.


Corporate Governance is affected by legislation, regulation and voluntary codes in various countries viz:

USA - Securities and Exchange Commission (SEC)/Sarbanes-Oxley (SOX);

UK - Corporate Governance Code [previously Combined Code];

South Africa - King III: The King III code on Corporate Governance for South Africa

has developed a new approach to integrating corporate governance into normal

business operations. King III highlighted the interconnectedness of strategy, risk,

profitability and sustainability by espousing ethical leadership driven by stakeholder

engagement and integrated thinking. The King Code recognizes that the Company

(Corporate) Secretary plays a pivotal role in assisting the board of a company to instil

effective corporate governance;

OTHER - Organisation for Economic Co-operation and Development (OECD),

International Corporate Governance Network (ICGN);

CODES from major institutional investors such as Californian Pension Fund

(CALPERS) and Hermes;

Definitions of Accounting Profession/Accountant and the Legal Profession/Lawyer:

1. The theory and system of setting up, maintaining, and auditing the books of a firm;

art of analyzing the financial position and operating results of a business house from

a study of its sales, purchases, overhead, etc.

2. A detailed report of the financial state or transactions of a person or entity: an

accounting of the estate.

3. The rendering or submission of such a report*.

Accountant: (Business / Professions) a person concerned with the maintenance and audit of business accounts and the preparation of consultant reports in tax and finance* A person whose job it is to keep or inspect financial accounts - Oxford English Dictionary

Legal profession*: A vocation that is based on expertise in the law and in its applications.

Although there are other ways of defining the profession, this simple definition may be best, despite the fact that in some countries there are several professions and even some occupations (e.g. police service) that require such expertise but that may not regarded as within the ‘legal profession’.

A person learned in the law; as an attorney, counsel or solicitor; a person who is practicing law - Black's Law Dictionary:

*Note: Definitions marked with an asterisk are taken from the Collins English Dictionary - Complete & Unabridged 10th

Edition

http://dictionary.reference.com/browse/art

http://www.britannica.com/EBchecked/topic/332745/law

http://www.britannica.com/EBchecked/topic/467289/police

http://en.wikipedia.org/wiki/Law

http://en.wikipedia.org/wiki/Attorney_at_law

http://en.wikipedia.org/wiki/Counsel

http://en.wikipedia.org/wiki/Solicitor

http://en.wikipedia.org/wiki/Practice_of_law

http://en.wikipedia.org/wiki/Practice_of_law

http://en.wikipedia.org/wiki/Black%27s_Law_Dictionary


Annexure IV

Sources used for Figures and Statistics

The data and financial information provided in this proposal is taken from a variety of

sources and, as far as possible, cross checked against data/ sources. Most of the figures used to calculate the gross revenue result from compensation surveys of members of CSIA.

Because of the lack of definition of the sector, it is inevitable that a certain amount of

extrapolation of data and/or guesstimate is used. For example, no data could be found on corporate governance, compliance and secretarial advisory services in Central and South

America, Russia and the Ukraine so a very conservative approach was taken and a figure of a mere 10,000 employees is given; using the ILO global average wage of US$18,000 the

figure of gross revenue is calculated in the same way as it was for countries where ‘hard data’ is available. This formula is simple and conservative:

Number of people employed in the sector (including all sub-sectors) X average remuneration

in US$ (where possible this is broken down into subsections) X 2.

The multiple of two is used as an estimate of the value of an employee to an organisation – i.e. the multiple of revenue versus expenditure (in this case using only compensation as a

benchmark).

Figures obtained from Hong Kong and multi-national company service providers as well as data collected by The Hong Kong Institute of Chartered Secretaries, Institute of Company

Secretaries of India and Chartered Secretaries Australia suggest that this is a very conservative figure and the more realistic ratio is between US$ 3-5 income to $1 spent on

remuneration, the highest being a ratio of $9 to $1.

While realising that the figures in terms of gross revenue are a long way from perfect they are indicative of the value the corporate governance, compliance and secretarial advisory

services.


Professional / Trade Organizations / Societies

1. Chartered Secretaries Australia 2. Chartered Secretaries Southern Africa

3. The Hong Kong Institute of Chartered Secretaries a. Annual Remuneration Survey 2011

b. CSj – Official Journal of HKICS: February 2012 edition – Company Secretary’s Salaries in Hong Kong

4. The Institute of Chartered Secretaries and Administrators, UK 5. Institute of Company Secretaries of India

6. The Malaysian Institute of Chartered Secretaries and Administrators 7. The Singapore Association of the Institute of Chartered Secretaries and

Administrators 8. Society of Corporate Secretaries and Governance Professionals, USA

9. The Institute of Chartered Secretaries & Administrators in Zimbabwe

Other Sources/Organisations

10. The World Trade Organisation a. 10 benefits of the WTO trading system (2008)

11. The United Nations International Labour Organisation a. Global Wage Report 2010-11

12. Office of National Statistics, UK 13. Offshore Investments Limited (a company service provider – 243 employees in

mainland China, Hong Kong, Taiwan, Macau and Singapore) 14. Society of Human Resources Managers

a. Global Rise in Salary Increase Budges Projected 2012 b. www.shrm.org

15. Tricor Services Limited (a company services provider – 1,550 employees, offices in 15 countries across Asia and the UK)

Websites:

16. www.averagesalary.com

17. www.ons.gov.uk 18. www.salary.com


Annexure V Previous Correspondence and Resolutions of CSIA Members


Extract of the Minutes of The Hong Kong Institute of Chartered Secretaries (HKICS) Council Meeting on 17 June 2008: The Council (of HKICS) agreed and decided that: Review of the 2008 initiatives and its impact on the 2008 / 2009 master budget The CE briefed Council on the 2008 initiatives. It was noted that there was a need to re-prioritise these initiatives. Council members discussed and agreed that the categorisation of professional sectors to be lobbied in the WTO…should be put in the priority list. Extract of the Minutes of HKICS Council Meeting on 28 October 2008: The Council (of HKICS) agreed and decided that: Strategic development of the Chartered Secretary Profession To note the letters from HKICS President to WTO Director-General Mon Pascal Lamy and HKSAR Financial Secretary Mr John Tsang and to consider the strategic development of the Chartered Secretary profession Letters to WTO Secretary General Mon Pascal Lamy and one to HKSAR Financial Secretary Mr John Tsang were noted. It was further noted that (HKICS Vice President) MN and (HKICS General Manager & Company Secretary) LL have attended a roundtable meeting on CEPA-V From SME Perspective Seminar. A copy of the new issues under CEPA-V was tabled and noted. [Post meeting note: A meeting has been arranged between CE and Ms Angela Lee, Assistant Director of Trade & Industry Department, on 25 November 2008 to discuss WTO matters.]


RESOLUTION PASSED BY Chartered Secretaries Southern Africa on 17 November 2011

“The Board noted with concern that the Corporate Governance, Compliance and Secretarial Advisory Services were nowhere recognized as a separate Heading in the Services Sectoral Classification List of the WTO. The Board resolved that the Company Secretaries/Chartered Secretaries and Administrators profession (represented by CSIA) may recommend and pursue the introduction in the Services Sectoral Classification List of the WTO, the following new services namely: “CORPORATE GOVERNANCE, COMPLIANCE AND SECRETARIAL ADVISORY SERVICES • Corporate Secretarial Services • Secretarial Audit and Compliance Audit Services • Certification Services • Corporate Governance Services • Corporate Advisory Services CORPORATE SECRETARIAL SERVICES This sub-Services sectoral Classification of the WTO to include promotion, formation and

incorporation of companies and matters related therewith; filing, registering any document

including forms, returns and applications by and on behalf of the company as an authorized

representative; maintenance of secretarial records, statutory books and registers; arranging

board/general meetings and preparing draft minutes thereof and all work relating to shares

and their transfer and transmission.

SECRETARIAL AUDIT AND COMPLIANCE AUDIT SERVICES

This sub-Services sectoral Classification of the WTO to include all statutory Secretarial Audits, Compliance Audits and Compliance under Company, corporate and Securities Laws including regulations and guidelines, by the members of the Company Secretaries/Chartered Secretaries and Administrators profession. CERTIFICATION SERVICES This sub- Services sectoral Classification of the WTO to include all statutory certification services for which the members of the Company Secretaries/Chartered Secretaries and Administrators profession are authorized. CORPORATE GOVERNANCE SERVICES This sub-Services sectoral Classification of the WTO to include all services relating to advising on good governance practices and compliance of Corporate Governance norms as prescribed by the Companies Legislations of different countries, Corporate, Securities and other legislations of different countries for the time being in force.


CORPORATE ADVISORY SERVICES This sub-Services sectoral Classification of the WTO to include services relating to: Advising Companies on management including any legal and procedural matters falling under Companies Legislations, Securities Laws and Corporate Laws of different countries.


Due diligence


Foreign Collaborations and Joint Ventures

Project Planning”

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