The participation of directors in the Annual General Meeting is important for SEHK in order to develop a good understanding between issuers and shareholders. A new registration rule (Registration Rule 13.39(5A)/GEM Rule 17.47(5A)) has been added, requiring issuers to disclose their participation when the results of the investigation are announced. ・As a transitional measure, issuers with a same-sex board of directors must appoint at least one director of a different sex to the board of directors by December 31, 2024.  ・Single-gender issuers that committed in the inclusion document to set targets for the implementation of gender diversity should appoint a director of a different sex in accordance with this obligation.  ・IPO applicants must be required at the time of filing of the In July 2022, Form A1 indicates at least one director of a different sex whose appointment is expected to take effect at the time of registration.  A new listing rule (listing rule 3.27A / GEM rule 5.36A) has been added, requiring an issuer to appoint a nominating committee chaired by the chairman of the board of directors or an independent non-executive director, and the committee is composed of a majority of INED. As part of the changes to the listing rules, the Hong Kong Stock Exchange has issued a “Guidance for Boards of Directors and Directors” (the “Guidance”) which provides practical advice to the Board of Directors and Directors to facilitate the exercise of their roles and responsibilities, including a recommendation to register candidates for appointment as Independent Non-Executive Directors (INED) for at least two months. before listing. The Guidelines are not part of the Registration Rules and do not modify the requirements of the Registration Rules. in the case of a full member, shareholder or chief executive officer or employee of a former professional advisor, he or she would only be considered independent of the issuer after a two-year cooling-off period, instead of one year under the existing rules (listing rule 3.13(3)); an indication of the issuer`s commitment to diversity at all levels, including gender, age, cultural and educational background or work experience; The Stock Exchange will not allow shareholder approval to be implicit in the electronic distribution of company announcements by issuers. The (d)(ii) disclosure requirement in Schedule 14 is amended to require an issuer to disclose its principles for appointing directors adopted during the year in its corporate governance report.
We have published a newsletter on changes to the Corporate Governance Code and listing rules in Hong Kong. To view the PDF version, please click on the following link. ・The shareholder documents accompanying the resolution on the subsequent appointment of a long-standing INED should include additional information on the factors that have been taken into account, the process and discussion of the Board of Directors (or Nominating Committee) in order to conclude that the long-standing INED remains independent and should be re-elected.  ・If all INEDs on board are long-standing INEDs, the issuer: In order to strengthen the independence of the board of directors, SEHK has revised the CP so that if an INED in office for more than nine years is to be re-elected, it will have to go through stricter procedures where the relevant resolution should be approved separately by the shareholders and a document, explaining why the Board of Directors still considers INED to be independent, should be distributed to shareholders. before. Part 2 of the new Code must indicate in the annual report and the interim report whether the CP has been complied with and, if not, the “review of the reasons and explanations” for the variance must be indicated. When determining the independence of a director under registration rule 3.13, the same factors apply to members of the director`s direct family (new note 2 to registration rule 3.13); In addition, issuers must include in their AoM report all information that falls within the scope of the disclosure requirements set out in paragraphs G to P of the Corporate Governance Code (“Mandatory Disclosures”). ensure that recruitment and selection practices at all levels are structured in such a way that a wide range of candidates are considered; and the policy should define its objectives, including by ensuring that the board of directors has a balance between skills, experience and diversity of views appropriate to the requirements of the issuer`s business; New CP B.1.4 – Require an issuer to put in place mechanisms to ensure that the Commission has independent views and contributions and to disclose these mechanisms in its report on crop management measures. The Committee should review annually the implementation and effectiveness of such a mechanism. The board of directors should determine the issuer`s objective, values and strategy and ensure that it is aligned with its and the issuer`s culture.  Requirements for the establishment of anti-corruption and whistleblowing policies also fall into this category in the context of corporate culture.
There is also a new recommended best practice suggesting that issuers should generally not provide INEDs with stock-based compensation (e.g., stock options or allocations) with performance-related elements.  a statement as to whether the issuer has identified and implemented programs that facilitate the development of a more diverse group of qualified and experienced employees and that their skills will prepare them for management and board positions in a timely manner. Recommended best practice A.3.3 is introduced, according to which the board of directors should disclose the reasons if it considers that a proposed director is independent, even if the person holds inter-director mandates or has significant ties to other directors through an interest in other companies or organizations. According to Recommended Best Practice Note A.3.3, there is a cross-term when two (or more) directors sit on the board of directors of the other. Issuers are expected to comply with the provisions of the Code, but may choose to deviate from it. However, the provisions of the Code are subject to the “Comply or Explain” requirements; Issuers must indicate in their interim reports (and, if applicable, in the interim summary reports) and in their corporate governance reports, which must be included in their annual reports (and, if applicable, in the financial summary reports), whether the provisions of the Code have been complied with and take into account any deviations from them. Schedule 14 of the Rules for the Listing of Securities on sehk (“Listing Rules”) (Annex 15 of the GEM Rules), which was referred to as the “Corporate Governance Code and Corporate Governance Report” (“Old Code”), is now renamed the “Corporate Governance Code” (“New Code”).