(William Li, Nio's founder, chairman, and CEO. File photo)
Nio's recent appointment of one of China's most influential businesswomen as an independent director has sparked a high interest. The latest report suggests that this could be an important step in the company's preparations for a Hong Kong listing.
Nio announced on Monday that Long Yu, who currently serves as the Founding and Managing Partner of BAI Capital, has been appointed as an independent director to Nio's board, effective July 12.
Chinese tech media outlet LatePost reported Thursday that the move puts Nio more in line with the criteria for listing in Hong Kong, where Xpeng Motors made a similar arrangement ahead of its July 7 listing.
This allows Nio to meet both 2 established listing rules and 2 proposed listing rule amendments, the report said, which are:
A company's board of directors should include at least three independent directors, which need to make up at least one-third of the board's membership (existing rules).
A company should have audit committees of at least three members, all of whom must be non-executive directors (existing rules).
A company must have a nomination committee that is chaired by an independent director and has a majority of independent directors as members (revised rules).
The board needs to have at least one member of the other gender (revised rules).
Nio currently has six seats on the board, with two seats held by William Li, the company's founder, chairman and CEO, and co-founder Qin Lihong, one seat held by James Gordon Mitchell from the second-largest outside shareholder Tencent, and three seats held by independent directors.
The three committees under Nio's board - the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee - are chaired by three independent directors.
This structure is extremely similar to Xpeng, which has successfully dual-listed in Hong Kong, LatePost said, adding that Xpeng previously appointed two new independent directors to chair the compensation committee and the nominating committee at the time of listing in order to meet the conditions for listing in Hong Kong.
However, it is worth noting that LatePost quoted Nio's response that the board restructuring was based on the management system of a technology company of the same market capitalization to increase the diversity of the board composition, and was not related to the listing in Hong Kong.
In addition, in May this year, Nio had held an extraordinary shareholders' meeting to change the board structure, proposing to give Nio User Trust the power to nominate a director.
LatePost said the proposal has been passed, which means that Nio's board may add a director nominated by the owners.
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