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Exchange Reports on Implementation of Corporate Governance Code and Corporate Governance Report

Regulatory
27 Nov 2015

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 involved analysing the disclosures made by 1,237 issuers in their 2014 annual reports, covering the financial period from 1 January to 31 December 2014.

Findings of the review included the following:

  • 35 per cent of issuers complied with all the Code Provisions ("CPs").
  • 98 per cent of issuers complied with 70 or more CPs, out of 75.
  • Issuers with a larger market capitalisation achieved a higher overall compliance rate than those with a smaller market capitalisation.

The review also included the Exchange's comments on the quality of the explanations in relation to the five CPs with the lowest compliance rates.

"The issuers have continued to achieve a high rate of compliance on the CPs. The substantive revision of the Code1 in 2012 and the introduction of the board diversity CP in 2013 have been widely adopted by the issuers. However, there is room for improvement on the overall quality of explanations on why the issuers chose to deviate from the CPs." said David Graham, HKEx's Chief Regulatory Officer and Head of Listing.

Issuers are reminded that the amendments relating to the internal control section of the Code will apply to issuers' accounting periods beginning on or after 1 January 2016.

The report, entitled "Analysis of Corporate Governance Practice Disclosure in 2014 Annual Reports", is available under the Issuer-related Information section of the HKExnews website.


 

1 The Code contains Code Provisions and Recommended Best Practices. Code Provisions are not mandatory but issuers must disclose in their interim and annual reports whether they have complied with each one. If issuers deviate from a Code Provision, they must give reasons. All issuers reviewed disclosed whether or not they had complied with the Code Provision requirements. Recommended Best Practices are for guidance only. Issuers are encouraged, but not required, to state whether they have complied and give reasons for any deviation.

 

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Updated 27 Nov 2015