Market Existential Episode 31 | November 2024

Episode Description:

Julia Charlton presented a webinar discussing the Hong Kong Stock Exchange’s proposed amendments to the Corporate Governance Code and related Listing Rules. The Exchange’s proposals, published in a consultation paper in June 2024, aim to strengthen corporate governance practices and enhance board effectiveness and independence.

Key proposals include introducing a Lead INED role to improve communication with shareholders and implementing mandatory disclosure requirements for director training, emphasizing a comprehensive understanding of directors’ responsibilities. The Exchange also proposes a hard cap of six concurrent directorships and a tenure limit of nine years for INEDs to ensure directors can devote sufficient time to their roles.

A Code Provision would require regular board performance reviews and the establishment of a board skills matrix to enhance board composition. To increase diversity, the Exchange recommends having at least one female director on the nomination committee and proposes a Listing Rule requiring listed companies to have a workforce diversity policy.

The amendments also focus on risk management and internal control, suggesting modifications to Mandatory Disclosure Requirements for more detailed reporting. The proposed changes are expected to take effect on January 1, 2025, with a transition period for specific amendments. The consultation period has ended, and the Exchange will review responses before publishing its conclusions.