24 September 2021
On 5 September 2021, the Hong Kong Chartered Governance Institute (“HKCGI”) issued a guidance note on securities law and regulation (“Guidance Note”).
In the Guidance Note, HKCGI looked at: board culture, which is becoming important as a governance topic for listed issuers; international trends; proposals for Hong Kong; and culture as a factor in determining appropriate sanctions for rule breaches. HKCGI considered the development of listed companies and provided some practical tips for governance professionals.
HKCGI made a number of recommendations to company secretaries to support the board in anticipation of changes on the Corporate Governance Code on company culture:
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Work with the board to formulate the company’s vision, value and strategy, ensuring this aligns with the company’s culture. Liaise with external consultants where required.
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Assist the board in preparing the disclosures on culture. The Stock Exchange expects that this should be precise, succinct and, in general, not more than one page.
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Review the adequacy of, and update, any existing whistleblowing and anti-corruption policies or assist the board with preparing new policies.
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Assist the board to develop, update and publicise its other policies and codes of conduct in line with regulatory expectations.
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Assist the board to establish a platform for idea sharing and to escalate and discuss any concerns on misconduct or any misalignment of behaviors and culture.
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Ensure directors are regularly reminded of their duties to ensure they fully understand the nature of their responsibilities. This could be achieved through:
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periodically circulating guidance notes on director duties; or
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providing briefings on director duties and other topics at board meetings (including for instance arranging external consultants to present on specialist topics such as internal controls and company culture).
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Ensure the company culture is reflected in all board papers. Board packs, containing sufficient details on the matters to be discussed by the board, should be prepared by relevant senior management and circulated to the board reasonably in advance of the meeting, so that directors have sufficient time to review the documentation and request further information, if required.
For more details, please refer to the Guidance Note.
Companies wishing to ensure compliance with regulatory requirements such as the above should consider engaging a professional corporate governance advisor, such as Hauzen Services Limited.
