Governance Issues Reflected in the Postponed Board Term Renewal of CITIC Securities

Based on the collected information, this article systematically analyzes the governance issues reflected in the postponed board term renewal of CITIC Securities.

According to public information, the term of the 8th Board of Directors of CITIC Securities expires on December 29, 2025. The company issued an announcement stating that “in view of the fact that the nomination of relevant director candidates has not been completed and the election for term renewal is still in preparation”, the board of directors will postpone its term renewal until the shareholders’ meeting approves the formation of a new board of directors in accordance with the Articles of Association [0].

• Chairman Zhang Youjun, born in 1965, has reached the age of 60, which is the mandatory retirement age in accordance with the management regulations for leading personnel of state-owned enterprises [0]
• Zhang Youjun has served as Chairman of CITIC Securities since 2016, with a tenure of ten years to date
• He was supposed to retire in July 2025, but the term renewal has not been completed by the end of the year

• The retirement age system for leading personnel of state-owned enterprises is not strictly enforced
• The board of directors lacks necessary age limits and renewal mechanisms
• This may lead to management rigidity, lack of new talent and innovation momentum

• The company’s announcement attributes the postponement to “the nomination of relevant director candidates has not been completed” [0]
• The preparation work for term renewal lacks a clear timetable and milestone nodes
• The terms of special committees and senior management have been extended accordingly, resulting in a chain of delays

• The board’s nomination process lacks standardization and transparency
• The qualification review criteria for candidates are unclear
• There may be issues of insider control, with major shareholders excessively interfering in the composition of the board of directors

• As a large state-owned enterprise, CITIC Securities has a high proportion of state-owned shares
• The composition of the board of directors is dominated by internal directors and directors with state-owned backgrounds
• Independent directors lack sufficient independence

• The boundary between the leadership of the Party Committee (Party Group) and board governance is unclear
• There is a clear tendency towards administrative management, and the market-oriented talent selection and employment mechanism is imperfect
• The mechanism for protecting the interests of minority shareholders is weak

• The Company Law clearly stipulates that the term of office of each director shall not exceed three years [1]
• The Guidelines for the Articles of Association of Listed Companies require that the original directors shall continue to perform their duties if the election for term renewal is not conducted in a timely manner upon the expiration of their terms. However, if the term renewal is not initiated or is delayed for a long time, it may be deemed as abuse of control rights and damage to shareholders’ rights [1]
• CITIC Securities’ current term renewal postponement has lasted for a long time, which has attracted market attention

• Insufficient awareness of the seriousness of the basic governance systems for listed companies
• May face the risk of being ordered to rectify by regulators
• May have a negative impact on the legalization process of the capital market

• Inertia of Administrative Management:
  State-owned securities firms have long been influenced by administrative management models, and term renewal work often requires approval from multiple levels
• Complex Personnel Arrangements:
  Involve coordination among multiple parties such as Party Committee departments and administrative competent authorities
• Difficulty in Interest Balance:
  Different stakeholders have disputes over the distribution of board seats

• Imperfect Nomination System:
  Lack of an open and transparent nomination process for director candidates
• Ambiguous Qualification Review Criteria:
  Lack of clear, quantifiable criteria for director qualifications
• Lack of Accountability Mechanism:
  There is no effective restraint and accountability for postponed term renewal

• Stability Overrides Reform:
  Out of consideration for maintaining stable operations of the company, there is a tendency to retain the existing management
• Performance Pressure:
  Against the backdrop of high market volatility, term renewal may affect business continuity

• Guarantee of Stability:
  During the postponement period, the original board of directors continues to perform its duties to ensure stable company operations
• Transition Preparation:
  Sufficient preparation time is provided for the election and handover of the new board of directors

• Reduced Governance Effectiveness:
  Long-term failure to conduct term renewal may lead to the weakening of the board’s functions
• Damaged Market Confidence:
  It sends a signal of irregular governance to the market, affecting investor confidence
• Risk Accumulation:
  Prolonged delay in resolving the issue may accumulate greater governance risks
• Compliance Risks:
  It may trigger regulatory attention and even face administrative penalties

• Establish an open and transparent nomination process for director candidates
• Clarify the qualification review criteria and procedures for candidates
• Introduce a market-oriented talent selection and employment mechanism

• Clarify the age limit for board members
• Establish an enforcement mechanism for the mandatory retirement system
• Make proper succession plans and talent reserves

• Strictly implement the basic governance systems for listed companies
• Establish a timetable and accountability mechanism for term renewal work
• Proactively accept supervision from regulatory authorities and investors

• Increase the proportion and independence of independent directors
• Balance the interests of state-owned shares and other shareholders
• Clarify the power and responsibility boundaries between the Party Committee (Party Group) and the board of directors

The incident of postponed board term renewal of CITIC Securities reflects deep-seated problems in corporate governance of China’s state-owned securities firms, including ambiguous age limits for executives, opaque nomination mechanisms, unbalanced governance structures, and insufficient compliance awareness. These issues not only affect the standardized operation of the company but also have a negative impact on the healthy development of the capital market. As a leading enterprise in the securities industry, CITIC Securities should play a demonstrative role in corporate governance. Regulatory authorities should take this opportunity to promote the improvement of governance mechanisms for state-owned securities firms, enhance the overall governance level of the industry, and promote high-quality development of the capital market [0][1].

[0] NetEase Finance - Announcement and Related Analysis of Postponed Board Term Renewal of CITIC Securities (https://www.163.com/dy/article/KJE78H420519MPBR.html)

[1] Time Weekly - Analysis of Postponed Board Term Renewal of Listed Companies (https://static.time-weekly.com/time-weekly/cef50308700b615db2e7b82438cb76d6/20251229/1b506f0834cc4df1ae262eb01c18d508.pdf)