Domestically listed companies increasingly need to have a dedicated general counsel or legal director, as a result of the growing sophistication of regulatory and compliance frameworks and the sheer amount of transactions being done.
Shanghai listed, Zhuhai-headquartered Huafa Industrial is the latest to recognise the need and has hired its first legal director, a vice president-level post, from Zhuhai-based Guangdong Band law firm. Previously the managing partner of Guangdong Band, Yu Shuling left the firm in late January to take up her new role as the legal director of Huafa Industrial, a company that is principally engaged in the development and operation of properties. Prior to the appointment, Yu and her team had served the company for nine years as a long-standing external counsel.
"I've been working with Huafa for many years, and I know its business very well. As the company has been expanding and investing significantly across the country, it has clearly seen the urgency of having a senior legal director who can oversee its in-house legal team, centralise the management of risks and legal affairs, and devise in close cooperation with the executive directors the legal strategy of the company," said Yu.
In recent years, Huafa has done a growing number of M&A and capital markets transactions. 2009 highlights include the issuing of RMB1.8m in corporate bonds; buying land in Nanning for RMB2.5bn; acquiring 80% of the shares in Dalian Huateng Real Estate Development; acquiring a stake in Baotou Celebrity Property; and taking over Zhuhai Huaming Technology Development.
The company's increasing legal spending is also a reflection of its growing needs for legal services and support. According to its 2009 annual financial report, total fees paid for professional and advisory services in 2008 increased by 144% to RMB17.4m, and spending on external legal fees in 2008 increased by RMB850,000. The growth of its legal spending is expected to be even greater in 2009.
Yu also identified the trend towards hiring senior legal directors and general counsel in listed companies. "All the listed companies have established in-house legal departments to comply with CRSC's requirement. Many of them are paying more attention to legal and compliance issues. For companies that are expanding very fast and are investing in a wide range of sectors, appointing a legal director and general counsel is sensible and inevitable."
Yu, now working with Huafa's existing five-person in-house team, said the further expansion of the team depends on the up-coming board meeting which will formulate plans for the company in the year ahead.
After Yu's departure, Guangdong Band, a 20-lawyer firm, named partner Chen Ruishan as the new managing partner.
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