Market Existential Episode 40 | April 2025

Episode Description:

Julia Charlton discusses upcoming amendments to the Hong Kong Stock Exchange’s Corporate Governance Code, set to take effect on July 1, 2025. These amendments focus on enhancing board effectiveness and independence, increasing diversity, improving risk management, and introducing greater disclosure requirements on dividend policies.

Key changes include the introduction of a Lead INED role to serve as an intermediary and communication channel for directors and shareholders. The Exchange will also impose a cap on the number of concurrent Hong Kong-listed company directorships for independent non-executive directors (INEDs) and implement a nine-year cap on INED tenure to promote board refreshment.

The Listing Rules will enforce mandatory continuous professional development for directors to keep them updated on key industry and regulatory developments. New provisions will require separate disclosure of gender ratios across the workforce and senior management, as well as set out requirements for maintaining a board skills matrix.

The Exchange aims to improve transparency and constructive communication between boards and shareholders by mandating disclosures related to board performance reviews and dividend policies. Finally, while not all suggestions such as increasing INEDs to a majority in boards were adopted, the Exchange acknowledges these concerns for potential future consultations.