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29 May, 2019
The Hong Kong Stock Exchange has updated its guidance letter on producing IPO listing documents to require new listing applicants to specifically address gender diversity in their IPO prospectuses.
Since 1 January 2019, greater focus has been placed on board diversity with the requirement for listed companies to have a diversity policy being upgraded from a Corporate Governance Code provision to a mandatory Listing Rule. The Stock Exchange has now taken a step further to try to address the gender imbalance on boards of Hong Kong-listed companies by requiring specific gender diversity disclosures in IPO prospectuses.
Under the revised guidance, a new listing applicant will need to include in its IPO prospectus its policy on board diversity, specifically including gender. In circumstances where the listing applicant has a single gender board, additional disclosure is required with the applicant needing to explain how and when board gender diversity will be achieved after listing. The prospectus should also include details of measurable objectives that the listing applicant has set to implement gender diversity and the measures it has adopted to develop its board pipeline to achieve board diversity.
As mentioned above, since the beginning of this year, nomination committees or the boards of existing Hong Kong-listed companies have been required to have a board diversity policy, with gender referred to as one of a number of factors that can be taken into account in achieving board diversity. Existing listed companies are also required to disclose the policy (or a summary of it) in their corporate governance report, including any measurable objectives set for implementing the policy and the progress in achieving those objectives. The Stock Exchange’s Guidance for Boards and Directors issued in July 2018 further encourages listed companies to articulate the benefits of diversity, including gender diversity, in their diversity policies and commit to diversity at all levels (including gender diversity). Issuers are encouraged to assess the company’s diversity profile annually, including the gender balance of directors and senior managers.
The introduction of these enhanced disclosure requirements specifically on gender diversity in new applicants’ IPO prospectuses marks a further step by the Stock Exchange to helping achieve gender equality on boards of listed companies in Hong Kong. Putting emphasis on gender diversity in the IPO listing document will help ensure that the issue is firmly on the agenda and being addressed by companies looking to list in Hong Kong.
For further information, please contact:
Matthew Emsley, Partner, Herbert Smith Freehills
matthew.emsley@hsf.com
