On Dec. 19, 2024, HKEX published consultation conclusions with new requirements.
Changes include limiting INEDs to a maximum of six Hong Kong listed directorships.
Phases out long-serving INEDs over nine years through a two-stage implementation.
Requires minimum 24 hours of training for first-time directors within 18 months.
Makes lead INED designation voluntary when board chair not independent; board requirements mandate nomination committee have directors of different genders.
Requires annual board performance reviews and skills matrix disclosure; enhances disclosures on shareholder engagement, risk management reviews; introduces workforce diversity policy requirement; requirement implementation vary as indicated.
General requirements effective Jul. 1, 2025.
On Jun. 14, HKEX proposed enhancements to governance code.
HKEX issued consultation paper Review of corporate governance code and related listing rules that proposes enhancing Corporate governance code, related listing rules.
Follows HKEX Nov. 2023 issued review on governance and guide re directors #191798.
Overview of Proposal
Key proposals include improvements to board effectiveness such as designation of a lead independent non-executive director (INED) where board Chair is not independent.
Annual director training on specific topics, regular board performance reviews, capping INEDs so they do not hold more than six HK-listed issuer directorships simultaneously.
INEDs serving more than nine years will no longer be considered independent.
Promote diversity by requiring nomination committee to comprise directors of different genders, annual reviews of board diversity policy, and a workforce diversity policy.
Require an annual review of risk management and internal control systems and enhanced disclosures of the review and findings, and better capital management.
Proposed amendments will apply to corporate governance reports for financial years commencing on or after Jan. 1, 2025; three-year transition period for INED proposals.
Consultation End
Interested parties encouraged to respond to the consultation paper by Aug. 16, 2024.
Sep. 2024 Speech on Proposal
On Sep. 20, 2024, HK SFC CEO Julia Leung delivered speech at Hong Kong chartered governance institute (HKCGI)’s 14th biennial corporate governance conference.
Reiterated proposed initiatives as above concerning corporate governance reform.
Evaluation of HKCGI's proposals concerning additional guidance and market education.
Potential extended implementation timelines for new corporate governance measures.
Continued focus on improving corporate board diversity beyond current requirements.
Dec. 2024 Consultation Conclusion
On Dec. 19, 2024, HKEX published consultation conclusions with new requirements.
Changes include limiting INEDs to a maximum of six Hong Kong listed directorships.
Phases out long-serving INEDs over nine years through a two-stage implementation.
Requires minimum 24 hours of training for first-time directors within 18 months.
Makes lead INED designation voluntary when board chair not independent; board requirements mandate nomination committee have directors of different genders.
Requires annual board performance reviews and skills matrix disclosure; enhances disclosures on shareholder engagement, risk management reviews; introduces workforce diversity policy requirement; requirement implementation vary as indicated.
