Corporate Governance of Hong Kong
CORPORATE GOVERNANCE OF HONGKONG
1. Overview of recent corporate governance reforms A. Recent initiatives
There have been numerous recent changes in Hong Kong in relation to corporate governance matters, extending well beyond legislation and nonbinding codes. The roles of relevant regulators have also been examined and proposed changes made.
As far as legislation is concerned, the most significant change is the introduction of the Securities and Futures Ordinance, which came into force on April 1 2003. The ordinance consolidated and modernized various rules and requirements, as well as: * Introducing a new licensing regime which makes insider dealing a criminal offence; * Introducing detailed provisions on securities misconduct; and * Imposing new disclosure requirements which are probably more extensive than those in various international markets.
There have also been various changes and proposed changes to the Companies Ordinance concerning issues such as the regulation of foreign companies, prospectus liability and enhancement of shareholders’ remedies.
Legislation aside, significant changes have also been made to the Hong Kong Listing Rules, most of which came into force on March 31 2004. These changes: * modernize and rationalize the entry requirements for listing applicants; * modernize and rationalize the continuing requirements of listed companies, particularly with respect to connected transactions and modifiable transactions; * require qualitative and quantitative disclosure in relation to accounting and other matters; * provide increased guidance and requirements on directors and their independence; and * extensively amend the Model Code, which governs when directors may deal in the securities of a listed company.
Behind all these changes, the regulatory approach and structure are also being examined.
The Stock Exchange of Hong Kong Limited (SEHK) is gradually moving away from pre-vetting to a
1. Overview of recent corporate governance reforms A. Recent initiatives
There have been numerous recent changes in Hong Kong in relation to corporate governance matters, extending well beyond legislation and nonbinding codes. The roles of relevant regulators have also been examined and proposed changes made.
As far as legislation is concerned, the most significant change is the introduction of the Securities and Futures Ordinance, which came into force on April 1 2003. The ordinance consolidated and modernized various rules and requirements, as well as: * Introducing a new licensing regime which makes insider dealing a criminal offence; * Introducing detailed provisions on securities misconduct; and * Imposing new disclosure requirements which are probably more extensive than those in various international markets.
There have also been various changes and proposed changes to the Companies Ordinance concerning issues such as the regulation of foreign companies, prospectus liability and enhancement of shareholders’ remedies.
Legislation aside, significant changes have also been made to the Hong Kong Listing Rules, most of which came into force on March 31 2004. These changes: * modernize and rationalize the entry requirements for listing applicants; * modernize and rationalize the continuing requirements of listed companies, particularly with respect to connected transactions and modifiable transactions; * require qualitative and quantitative disclosure in relation to accounting and other matters; * provide increased guidance and requirements on directors and their independence; and * extensively amend the Model Code, which governs when directors may deal in the securities of a listed company.
Behind all these changes, the regulatory approach and structure are also being examined.
The Stock Exchange of Hong Kong Limited (SEHK) is gradually moving away from pre-vetting to a