4 January 2022
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On 10 December 2021, The Stock Exchange of Hong Kong Limited (Exchange) published consultation conclusions on review of the Corporate Governance Code (CG Code) set out in Appendix 14 to the Rules (Listing Rules) Governing the Listing of Securities on the Exchange[1] (Appendix 14) and the related Listing Rules.
The consultation proposals include new measures aimed at further enhancing corporate governance (CG) standards among listed issuers in Hong Kong, specifically in the areas of corporate culture, director independence, diversity, nomination committee, communications with shareholders and Environmental, Social and Governance (ESG) reporting.
Most of the proposals will be adopted with certain modifications or clarifications. For instance, in respect of the proposal to upgrade a Code Provision (CP) to a Listing Rule to require establishment of a nomination committee chaired by an Independent non-executive director (INED) and comprising a majority of INEDs, the Exchange has modified the proposal such that either the board chairman or an INED is allowed to chair the committee. The proposal to require independent shareholders’ approval for re-election of INEDs serving more than nine years (Long Serving INEDs) will not be adopted.
Key amendments to the CG Code and the Listing Rules
Please click here to see the list of amendments.
New set of guidance
The Exchange published a new set of guidance “Corporate Governance Guide for Boards and Directors” to assist issuers’ compliance with the new CG requirements.
The new Guide consolidates the current thinking and expectations of issuers and stakeholders regarding governance practices, and should be read alongside the revised CG Code.
[1] Appendix 15 to the Rules Governing the Listing of Securities on GEM (GEM Rules).
[2] GEM Rule 17.104.
[3] Part 1 of Form A and Form B of Appendix 6 to the GEM Rules.
[4] GEM Rule 5.36A.
[5] GEM Rule 17.47(5A).
[6] GEM Rule 17.103(5)(d).
