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Exchange Reports on its Review of Listed Issuers' Corporate Governance Practices Disclosure

Regulatory
23 Sep 2016

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' (issuers) corporate governance practices.

The Exchange reviewed the corporate governance reports of 81 issuers with the financial year-end date of 30 June 2015 and analysed their compliance with the Corporate Governance Code and Corporate Governance Report (the Code) in its Listing Rules (Rules)1.  This review, together with two earlier reviews (for issuers with financial year-end dates of 31 December 20142and 31 March 20153),examined a total of 1,636 issuers' corporate governance reports.

All three reviews were performed in the past year and they show that, whilst the issuers' compliance level with the Code was high, the quality of explanations given for deviating from Code Provisions was varied and reflected a degree of "boilerplate" use.Furthermore, some issuers did not disclose board diversity policies and did not provide an explanation.4 

"The Exchange conducts periodic reviews of issuers' corporate governance reports and analyses their compliance with the Code" said David Graham, HKEX's Chief Regulatory Officer and Head of Listing.  "These exercises are important because they update us on the issuers' overall corporate governance disclosure and help us formulate policy on corporate governance-related Rules.  Issuers should avoid the temptation of 'box-ticking' and instead provide well-considered reasons for non-compliance with Code Provisions in corporate governance reports."

For further information, please see the report entitled "Analysis of Corporate Governance Practice Disclosure in June Year-end 2015 Annual Reports" in the Issuer-related Information section of the HKEXnews website.

1 The Listing Rules require issuers to state whether they have complied with the Code Provisions set out in the Code for the relevant accounting period in their interim (or half-yearly) and annual reports. Where the issuer deviates from the Code Provisions, it must give considered reasons (ie "comply or explain").
2 A news release on the results of the review has been posted on the HKEX website.
3 A news release on the results of the review has been posted on the HKEX website.
4 Code Provision A.5.6 states that the issuer should have a policy on board diversity and should disclose the policy or a summary of the policy in the corporate governance report.

Ends

Updated 23 Sep 2016