Hong Kong Capital Markets Update – Issue 9, December 2021
Hong Kong Capital Markets Update – Issue 9, December...
HKEX’s consultation conclusions on review of CG Code
On 10 December 2021, the Stock Exchange of Hong Kong Limited (the “Exchange”) published the conclusions (“Conclusions”) on its review of the Corporate Governance Code (“CG Code”). The revised Listing Rules and the new CG Code will be effective on 1 January 2022 and the new requirements will be applicable for the financial year commencing on or after 1 January 2022.
To ensure the corporate governance framework remains fit for its purpose, continues to promote improvements in the quality of governance and is adequate to maintain investors' confidence in the market, the Exchange published a consultation paper (the “Consultation Paper”) on 16 April 2021 seeking views and comments on proposed changes to the CG Code (for the summary, please refer to our Capital Markets Update Issue 2021-03). The consultation period ended on 18 June 2021.
The key changes are as follows:
- The proposal requiring independent shareholders’ approval for re-election of an INED serving more than nine years ("Long Serving INED") will not be adopted;
- A 6-month transition period will be available to IPO applicants in relation to the requirement for no single gender board (i.e. IPO applicants with single gender board would not be accepted for IPO submission filed on or after 1 July 2022);
- The proposal requiring mandatory disclosures on targets and timeline for gender diversity at the workforce level has been modified to require issuers to disclose: (i) gender ratios in the workforce (including senior management), (ii) any plans or measurable objectives the issuer has set to achieve gender diversity and (iii) any mitigating factors or circumstances which make achieving gender diversity across the workforce (including senior management) more challenging or less relevant; and
- The proposal requiring the chairperson of the nomination committee to be an INED has been modified to allow either the board chairperson or an INED.