Leadership Forum 2005 Workshop I Corporate Governance in
- Slides: 7
Leadership Forum 2005 Workshop I: Corporate Governance in Practice Paul Chow Chief Executive, HKEx 16 June 2005
Pressure for corporate governance reforms comes from many directions Corporate scandals Higher expectations from investors CG Reforms Evolution/ convergence of international best practices Intense competition for businesses and funding 2
In Hong Kong, Corporate Governance standards have enhanced significantly since the early 1990 s 1993 – 2000 § Code of best practices § Disclosure in Annual Reports § Guidelines on INEDs 2001 2002 2003 2004 § SCCLR CG proposals (phase 1) § HKEx Consultation on CG issues § HKEx Consultation Conclusions on CG issues § Code on CG Practices & requirement of CG Report § FSTB Corporate Action Plan § Amendments to Listing Rules § SCCLR CG proposals (phase 2) § Enshrine key Listing Rules in statute § Regulation of sponsors & IFAs § Regulation of accounting profession 3
In particular, major CG reforms have been implemented recently Code on CG Practices & CG Report Amendments to Listing Rules related to CG issues n Make reference to UK Combined Code n Comply or explain approach n Increase minimum number of INEDs from 2 to 3 n n Mandate the requirement of establishing an audit committee which comprises non-executive directors only Strengthen the rules governing notifiable transactions and connected transactions Mandate the disclosure of individual directors’ remuneration on a “named” basis Require any subsequent refreshments of the general mandate be subject to independent shareholders’ approval 4
In particular, major CG reforms have been implemented recently (cont’d) Enshrine key Listing Rules provisions in statute n n Regulation of sponsors & IFAs n Regulation of the accounting profession n Consider to enshrine the following provisions: • Regular financial reporting obligations of listed companies • Disclosure obligations in relation to corporate transactions (particularly connected transactions) • Obligation to disclose price-sensitive information Clarify the role and responsibilities of sponsors and IFAs (e. g. definition of independence & expectation on due diligence) Establish the Audit Investigation Board (AIB) Establish the Financial Reporting Review Panel (FRRP) 5
Conclusions n Current status in HK n n Going forward n n Major CG reforms taken place CG regulations in HK broadly aligned with international standards & best practices Market players digesting and implementing new requirements Promote a compliance culture – CG a matter of ethics, not box-checking Enhance monitoring and enforcement 6
Thank you 7
