On 11 December 2020, The Stock Exchange of Hong Kong Limited (HKEx) published the findings of its latest review of listed issuers’ corporate governance practices.
The HKEx made a number of findings and recommendations including:
- There was an improvement in listed issuers’ compliance with the Corporate Governance Code and Corporate Governance Report (Code). All sample listed issuers have complied with at least 73 out of 78 Code Provisions (CPs), and 41 per cent of them have fully complied with all CPs (2017/2018 review: 36 per cent). Explanations were given in substantially all occasions where there was deviation from a CP.
- While separating the roles of chairman and chief executive remains a challenge for listed issuers (with a compliance rate of 64 per cent), all the remaining CPs were complied with by a vast majority of the sample listed issuers (over 90 per cent). Listed issuers’ attention is drawn to the CP requiring disclosure of dividend policy recently introduced in January 2019, which was overlooked by individual listed issuers.
- Re-election of a long-serving INED– Listed issuers are reminded that satisfaction of the independence criteria set out in the Listing Rules by itself does not address whether the long-serving INED remains capable of bringing fresh perspectives and independent judgment to the board.
- Election of an overboarding INED– Most listed issuers justified the election of an overboarding INED by listing factors considered by the board, some of which are not necessarily relevant to a director’s time availability. Listed issuers should disclose how the board could be satisfied that the director can devote sufficient time to the listed issuer’s affairs.
- Board diversity, nomination of and selection criteria for directors– Almost all sample listed issuers disclosed their policy on board diversity. Listed issuers are encouraged to set and disclose measurable objectives on board diversity as they demonstrate the board’s commitment and enable tracking of the company’s progress in this area.