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Exchange Publishes its Latest Review of Listed Issuers’ Corporate Governance Practices and Updates its Guidance Material on ESG Reporting

Regulatory
16 Nov 2018

  • Reviews are part of the Exchange’s efforts to maintain high corporate governance standards
  • Review findings provide guidance on improving corporate governance reporting
  • Updated ESG reporting guidance material reflects investor expectations and international developments
  • Plan to launch ESG consultation in mid-2019

 

The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), today (Friday) published the findings of its latest review of listed issuers' corporate governance practices (the Review) and updated guidance material on environmental, social and governance (ESG) reporting.

Latest Review of Listed Issuers’ Corporate Governance Practices

The Review examined issuers’ corporate governance disclosures as well as their level of compliance with the Corporate Governance Code and Corporate Governance Report (Code).

For the Review findings, please see the report entitled “Analysis of Corporate Governance Practice Disclosure in June and December Year-End 2017 and March Year-End 2018 Annual Reports in the Exchange Reports section of the HKEXnews website.

“This Review is a part of the Exchange’s ongoing commitment to promote and maintain high corporate governance standards amongst issuers.  Whilst the Review noted an improvement in some aspects of reporting, it also gives valuable insight and guidance on ways in which corporate governance reporting can be improved,” said David Graham, HKEX’s Head of Listing.

New Corporate Governance Code and Related Listing Rules

Issuers are reminded that following the Exchange’s publication of its “Consultation Conclusions on Review of the Corporate Governance Code and Related Listing Rules” (Consultation Conclusions), new amendments to the Code and related Listing Rules will come into effect on 1 January 2019.  Important changes that relate to independent non-executive directors (INEDs) include requiring greater disclosure on the process of their identification as a possible INED, their time commitment and their potential contribution to the board, including diversity.  It will be mandatory for issuers to have and to disclose their board diversity and nomination policies.  The criteria determining an INED’s independence has also been enhanced.  For details of these and other changes to the Code and related Listing Rules, the Exchange encourages issuers to read the Consultation Conclusions to gain a better understanding of the new corporate governance regime.

In light of the new corporate governance regime, it is an opportune time for issuers to review their policies and practices on important corporate governance issues such as board diversity, particularly gender diversity, and their INEDs’ availability and time commitment to the board,” said Mr Graham.

Updated ESG Reporting Guidance

The Exchange has updated its “How to prepare an ESG report?” and Frequently Asked Questions (FAQs) on its ESG-related Listing Rules, taking into account recent international climate-related disclosure recommendations and with an emphasis on the issuer’s governance structure for ESG reporting.

“We are seeing increased demand for effective ESG reporting frameworks as more market participants become interested in sustainable economic development,” said Mr Graham.  “We plan to review our framework and have informal discussions with stakeholders with a view towards consulting the market in mid-2019 on proposed changes to our rules.”

For additional information, please see the ESG section of the HKEX website.

 

Ends

Updated 16 Nov 2018

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