Market Turnover


Exchange Publishes its Latest Review of Issuers’ Corporate Governance Practices, and Practitioners’ Insights on Corporate Governance and ESG

11 Dec 2020

The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), today (Friday) published: (a) the findings of its latest review of issuers’ corporate governance practices (Review); and (b) market practitioners’ insights entitled “Making inroads into good Corporate Governance and ESG management” (Practitioners’ Insights).  

Corporate governance and environmental, social and governance (ESG) are key pillars in upholding the quality and reputation of Hong Kong’s markets, which in turn contributes to the competitiveness and attractiveness of Hong Kong’s markets. Promoting corporate governance and ESG amongst Hong Kong’s issuers is a journey the Exchange is committed to for the long term.

Review of issuers’ corporate governance practices

The Review provides guidance to issuers on possible improvements to their corporate governance practices. It focuses on disclosures in the corporate governance reports of 400 randomly selected issuers (Sample Issuers) for the financial year ended on 31 December 2019; and disclosures in relation to re-election of long-serving INEDs (ie independent non-executive directors (INEDs) who have served more than nine years) and election of overboarding INEDs (ie holding their seventh (or more) directorship).

“Review of issuers’ corporate governance practice disclosures is a part of our continuing effort to maintain high corporate governance standards amongst issuers. A strong independent element, INED’s availability and time commitment and board diversity are all crucial to an effective board. We encourage issuers to follow our guidance to demonstrate their application of the Code and their governance practices,” said Bonnie Y Chan, HKEX’s Head of Listing.

Key findings and recommendations of the Review include:

  • There was an improvement in issuers’ compliance with the Corporate Governance Code and Corporate Governance Report (Code). All Sample Issuers have complied with at least 73 out of 78 Code Provisions (CPs), and 41 per cent of them have fully complied with all CPs (2017/2018 review: 36 per cent). Explanations were given in substantially all occasions where there was deviation from a CP.

  • While separating the roles of chairman and chief executive remains a challenge for issuers (with a compliance rate of 64 per cent), all the remaining CPs were complied with by a vast majority of the Sample Issuers (over 90 per cent). Issuers’ attention is drawn to the CP requiring disclosure of dividend policy recently introduced in January 2019, which was overlooked by individual issuers.

  • Re-election of a long-serving INED - Issuers are reminded that satisfaction of the independence criteria set out in the Listing Rules1 by itself does not address whether the long-serving INED remains capable of bringing fresh perspectives and independent judgment to the board.

  • Election of an overboarding INED - Most issuers justified the election of an overboarding INED by listing factors considered by the board, some of which are not necessarily relevant to a director’s time availability. Issuers should disclose how the board could be satisfied that the director can devote sufficient time to the issuer’s affairs.

  • Board diversity, nomination of and selection criteria for directors - Almost all Sample Issuers disclosed their policy on board diversity. Issuers are encouraged to set and disclose measurable objectives on board diversity as they demonstrate the board’s commitment and enable tracking of the company’s progress in this area.

For more details of the findings and our recommendations, please see the report entitled “Analysis of 2019 Corporate Governance Practice Disclosure” available in the section headed “Review of Implementation of Corporate Governance Code” on the HKEX website.

Practitioners’ insights on corporate governance and ESG

Over the years, the Exchange has introduced directors’ webcasts, e-trainings and published guidance materials with the aim of instilling an appropriate attitude towards corporate governance and ESG within Hong Kong issuers and their boards.

In partnership with the Hong Kong Securities and Investment Institute (HKSI), the Exchange is publishing a Practitioners Insights which presents a collection of experiences shared by market practitioners, with an aim to help directors of listing applicants and newly listed companies think holistically about building and integrating corporate governance and ESG considerations into their business strategy to achieve long-term value for their organisations.

“The publication of Practitioners Insights is part of our continued commitment to support and educate the market on corporate governance and ESG. Through market practitioners’ perspectives, we are seeking to reinforce the importance of implementing good corporate governance and ESG practices within an organisation, as early as possible. The overriding message is that change needs to come from the top-down. We thank HKSI and all the contributors for their time and effort, and we look forward to continuing to drive awareness and adoption of this important field in the future” said Katherine Ng, HKEX’s Chief Operating Officer and Head of Policy, Listing Division.

The practitioners insights is available in the sections headed “Corporate Governance Practices” and “Exchange’s guidance materials on ESG” on the HKEX website.



  1. Main Board Rule 3.13 and GEM Rule 5.09



About HKEX

Hong Kong Exchanges and Clearing Limited (HKEX) is one of the world’s major exchange groups, and operates a range of equity, commodity, fixed income and currency markets.  HKEX is the world’s leading IPO market and as Hong Kong’s only securities and derivatives exchange and sole operator of its clearing houses, it is uniquely placed to offer regional and international investors access to Asia’s most vibrant markets.

HKEX is also the global leader in metals trading, through its wholly owned subsidiaries, The London Metal Exchange (LME) and LME Clear Limited.  This commodity franchise was further enhanced with the launch of Qianhai Mercantile Exchange (QME), in China, in 2018.

HKEX launched the pioneering Shanghai-Hong Kong Stock Connect programme in 2014, further expanded with the launch of Shenzhen Connect in 2016, and the launch of Bond Connect in 2017.




Updated 11 Dec 2020