Public and Corporate Responsibilities.

Public Responsibilities
(as the front-line regulator of listed companies)

Pursuant to Section 63 of the SFO (Chapter 571 of the Laws of Hong Kong), HKEX, as a recognised exchange controller, shall act in the interest of the public with particular regard to the interest of the investing public; and ensure that the interest of the public prevails where it conflicts with HKEX’s interest.  We have the primary duty of ensuring orderly, informed and fair securities and futures markets, and of ensuring risks are managed prudently. The Board leads and supervises the Group’s management to act in the interest of the public as well as its shareholders, but in case of conflict, the former shall prevail.

HKEX has undertaken a series of initiatives, in particular through regular updates on the regulatory regime, to promote the standards of exemplary corporate governance in Hong Kong, improve the quality of information disclosures and transparency, and foster corporate governance culture amongst listed issuers in Hong Kong. 

With market participants’ strong support for corporate governance, we earn the trust and confidence of investors, and therefore gain a good reputation in the global market and remain to be a preferred market for capital raising.

HKEX will continue to enhance the corporate governance standards in Hong Kong according to the ever-changing business environment, and to align Hong Kong regulatory regime with international best practices, whilst giving regard to Hong Kong’s specific market conditions and requirement of all stakeholders.

Shareholder confidence is crucial for the continuing prosperity of HKEX as a high quality listed company.  

HKEX, as a listed company on The Stock Exchange of Hong Kong Limited (Stock Exchange or SEHK, an HKEX’s wholly-owned subsidiary), aims to be at the forefront of good governance in order to bolster shareholders’ trust and confidence in the Company.  The board of directors of HKEX (Board), with the support of Nomination and Governance Committee headed by the Chairman, is collectively responsible for constructing and maintaining an effective corporate governance framework for HKEX and overseeing the implementation of the adopted practices to ensure that HKEX has the appropriate checks and balances to avoid any pitfalls for our business.

Over the years, HKEX has been reviewing and improving its corporate governance practices to ensure that it is able to fulfill its public and corporate responsibilities, and to promote its sustainable development in shareholders’ interest.  The principles in the Corporate Governance Code (CG Code) have been adopted to shape HKEX's corporate governance structure and we strive to comply fully with the relevant rules, regulations and laws, the CG Code as well as the recommended best practices contained therein.  We have prepared a Compliance Checklist which summarised HKEX’s compliance with the CG Code.

Given the background of being the exchange controller and a listed company, HKEX has implemented a number of measures to ensure a level playing field with other listed issuers including, inter alia, the entering into of a Memorandum of Understanding (MOU) with the Securities and Futures Commission (SFC) and the Stock Exchange, the addition of a new chapter, Chapter 38, to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (Listing Rules), the separation of the regulatory function, and the establishment of a Conflict Committee. 

• MOU – Pursuant to the MOU, the SFC is HKEX's regulator, and shall take all actions and make all decisions in relation to HKEX as a listed company that would normally be taken by the Stock Exchange in respect of other listed companies, including but not limited to the suspension or removal from listing on the Stock Exchange and the application for waivers in compliance with the Listing Rules.  

• Chapter 38 of the Listing Rules – Chapter 38 of the Listing Rules sets out requirements that must be satisfied for the listing of HKEX on the Stock Exchange and the related matters, including, inter alia, the respective powers and functions of the SFC and the Stock Exchange, the framework established by the SFC for exercising its listing-related powers and functions, the respective rights and obligations of the SFC and HKEX, the procedures for filing documents with the SFC by HKEX, and the SFC’s powers and functions in the event of a conflict of interest. 

• Regulatory function – The Stock Exchange’s regulatory function in relation to other listed issuers as assumed by HKEX’s Listing Division is separate from and independent of HKEX’s income-generating business operations.  In order to uphold impartiality, such function is supervised by the Listing Committee and the GEM Listing Committee, both of which are totally independent of the Board.

• Conflict Committee – HKEX is required, under the MOU, to use its best endeavours to ensure that whenever a conflict of interest or potential conflict of interest may arise, the subject matter would be referred to the Conflict Committee for its consideration.  If the Conflict Committee determines that a conflict or potential conflict of interest does or may arise, the case would be referred to the SFC’s representatives who would consider if the Stock Exchange’s regulatory function could be discharged without the SFC’s intervention.  Any disagreement between the Conflict Committee and the SFC’s representatives would be referred to the SFC for final determination.