News and developments
SEHK revises Corporate Governance Code
The consultation period ended in mid-August and, based on market feedback, the revised code and listing rules are expected to take effect on 1 January 2025, with transition periods for certain proposals. This article outlines key revisions as a point of reference.
Designating a lead independent non-executive director (INED)
Where the chairperson is not an INED and/or the chair and chief executive is the same individual, the listed company should designate a “lead INED” to serve as an intermediary for the other directors and shareholders. Any listed company not complying with this expectation must provide explanations.
Mandatory director training
Currently, a listed company must disclose how its directors participate in continual professional development. The exchange proposes to require directors to receive mandatory continuing professional development annually on specified topics (including directors’ responsibilities, environmental and social governance [ESG], risk management and industry-specific updates).
Also, first-time directors and those who have not served as directors of listed companies for a period of three years or more must complete a minimum of 24 hours’ training within 18 months of appointment.
Board performance review
The current recommended best practice is proposed to be upgraded to a code provision (on a “comply or explain��� basis) requiring the board to conduct an evaluation of its performance at least once every two years, with specific disclosures to be made in the listed company’s Corporate Governance Report.
Board skills matrix. A listed company will be expected to maintain a board skills matrix and disclose in its Corporate Governance Report:
Author: Rossana Chu at YYC Legal LLP
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- the board’s existing skills;
- how the combination of skills, experience and diversity of directors serve the company’s purposes, values, strategy and desired culture; and
- details and plans to acquire further skills.
Author: Rossana Chu at YYC Legal LLP