The Stock Exchange of Hong Kong (“HKEX”) released two consultation papers proposing changes to (1) the Corporate Governance Code and related parts in the Listing Rules; and (2) documentary requirements relating to listed issuers.
With regards corporate governance, the major proposed change would be related to the independence criteria of non-executive directors (Rule 3.13). HKEX intends to strengthen the assessment criteria on the independence of non-executive directors, including extending the cooling off period for proposed non-executive directors who have been a director, partner, principal or an employee of a professional adviser providing services to the issuer and related entities from one year to three years. Also, nonexecutive directors would need to provide an explanation if they hold more than seven offices of directorship.
There are also more minor changes towards the Listing Rules. It can be seen as a positive move for the HKEX to further improve corporate governance of the listed companies. The proposed changes, if implemented fully, are welcomed by the industry because it enhances the stability and resilience of the whole ecosystem.