Mayer Brown is a distinctively global law firm, uniquely positioned to advise the world’s leading companies and financial institutions on their most complex deals and disputes. We have deep experience in high-stakes litigation and complex transactions across industry sectors, including our signature strength, the global financial services industry.
On 14 June 2024, The Stock Exchange of Hong Kong Limited (the Exchange) published a consultation paper outlining proposed amendments to the Corporate Governance Code (Code)...
To print this article, all you need is to be registered or login on Mondaq.com.
On 14 June 2024, The Stock Exchange of Hong Kong Limited (the
Exchange) published a consultation paper outlining proposed
amendments to the Corporate Governance Code (Code) and related
Listing Rules to strengthen the corporate governance for companies
listed in Hong Kong. The main proposals are summarised as
follows:
Area
Major Changes (Rule/Code Provision
(CP)(Comply/Explain)/
Mandatory Disclosure Requirement (MDR))
Board composition
Rule: An independent non-executive director (INED)
must not concurrently hold more than 6 directorships in Hong Kong
listed issuers.
Rule: Setting a cap of 9 years on an INED's
tenure
CP: In the absence of an independent board chair,
issuers should appoint an INED as a lead INED
Diversity
Rule: Issuers should have a diversity policy and
disclose it in their corporate governance report
CP: The nomination committee of issuers must have a
minimum of 1 director that is of a different gender
MDR: There should be a yearly review of the
implementation of the policy on board diversity
MDR: There should be a separate disclosure of the
workforce (excluding senior management) and senior management's
gender ratio
Board skills and training
Rule: All directors of issuers must receive mandatory
training each year on specific topics, which must include: duties
and responsibilities of the board and directors, issuer's
obligations, legal updates, corporate governance and ESG-related
matters, internal controls and risk management, and
industry-specific updates
Rule: First-time directors of an issuer or those who
have not been an issuer's director for at least 3 years before
their appointment (First-time Directors) must complete a minimum of
24 hours of training within 18 months of their appointment
date
MDR: Directors should disclose information about
training received, including the topics, hours, and format of the
training, and (if applicable) the names of external training
providers
CP: Issuers required to (a) maintain a board skills
matrix and (b) disclose information on various areas, including the
board's current skills mix and details of the skills that the
board plans to acquire
CP: Issuers should conduct a review of the board's
performance in the corporate governance report at least once every
2 years and should include disclosure on the scope, process and
findings of the performance review
Others
MDR: The nomination committee is required to conduct
an annual assessment and disclose information on each
director's time commitment and contribution to the board
MDR: Issuers are required to disclose in their
corporate governance reports the current term of appointment and
tenure of each director
MDR: Issuers with a dividend policy are required to
disclose information including the policy's objective or aim,
while those without are required to provide the reason(s) for the
lack of such a policy
MDR: Issuers with or without a dividend payment policy
must provide the reason(s) for the board's decision on any
material variation from the previous dividend rate (if the board
has declared a dividend) or the reason(s) for not declaring a
dividend
The effective implementation date of the above proposals is
proposed to be 1 January 2025, with a transition period of three
years in respect of the 9-year tenure requirement of INEDs and the
cap on the number of directorships (i.e. these requirements will
apply starting from 1 January 2028).
KEY TAKEAWAYS
Considering that the above proposals may come into effect as
early as 1 January 2025, issuers should start making preparations
as soon as practicable, for example, by reviewing and enhancing the
scope of the training to be provided to directors and searching for
suitable candidates to satisfy the new INED and diversity
requirements.
Mayer Brown is a global services provider comprising
associated legal practices that are separate entities, including
Mayer Brown LLP (Illinois, USA), Mayer Brown International LLP
(England & Wales), Mayer Brown (a Hong Kong partnership) and
Tauil & Chequer Advogados (a Brazilian law partnership) and
non-legal service providers, which provide consultancy services
(collectively, the "Mayer Brown Practices"). The Mayer
Brown Practices are established in various jurisdictions and may be
a legal person or a partnership. PK Wong & Nair LLC
("PKWN") is the constituent Singapore law practice of our
licensed joint law venture in Singapore, Mayer Brown PK Wong &
Nair Pte. Ltd. Details of the individual Mayer Brown Practices and
PKWN can be found in the Legal Notices section of our website.
"Mayer Brown" and the Mayer Brown logo are the trademarks
of Mayer Brown.
This
Mayer Brown article provides information and comments on legal
issues and developments of interest. The foregoing is not a
comprehensive treatment of the subject matter covered and is not
intended to provide legal advice. Readers should seek specific
legal advice before taking any action with respect to the matters
discussed herein.
