Report on Improving Corporate Governance in Hong Kong

Оригинал на английском языке.
Гонконгский институт лицензированных публичных бухгалтеров
Hong Kong Institute of Certified Public Accountants
Авторы: Syren Johnstone и Say H Goo
Обзор текущего состояния (дата издания отчета 15.12.2017) корпоративного права Гонконга, основанного на Ординансе "О компаниях" 2014 года (Hong Kong Companies Ordinance) и Ординансе "О ценных бумагах и фьючерсах" 2003 года (Hong Kong Securities and Futures Ordinance). Исследование недостатков действующего режима и предложения о направлениях развития.

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Пятница, 03 мая 2019 апдейт:

1. Introduction to the Study and its Purposes. 1.2.1 Domestic drivers

The modern development of CG reform in Hong Kong can be traced to various sources. The last few decades of the 20th century witnessed the inception of the foundations on which today's system of financial market regulation rest. In the period since the 1990s to date, a more specific, targeted and recognizable CG system has evolved within a regulatory framework that continues to develop. The setting of CG standards primarily arises out of complementary developments to corporate and securities legislation as well as the non-statutory listing rules issued by The Stock Exchange of Hong Kong Limited (SEHK). Enforcement of those standards is spread across several agencies with varying degrees of effectiveness.

Prior to the 1970s the market was largely unregulated, depended on a colonial transplant of law, and had no effective financial law or regulation, which only began to develop in from the 1970s. This left CG in Hong Kong primarily a matter of the general fiduciary provisions of English law. It is fair to say that at that time, other concerns were more pressing as Hong Kong was evolving from being a regional entrepot and merchant city toward becoming a commercial and financial centre.

The first legislative attempts to provide a firm informational basis for the financial market began in 1970 with the introduction of the Companies (Amendment) Ordinance to better govern company prospectuses. In 1971 the First Report of the Companies Law Revision Committee was issued. In 1973, the Stock Exchange Control Ordinance was introduced, representing the first step of Government regulation of stock exchanges. In 1988 the Hay Davison report was issued. That report led to the passage of the Securities and Futures Commission Ordinance and the establishment of the Securities and Futures Commission (SFC) in 1989. The overall focus of these developments was to improve the regulatory oversight of the markets. Among the many issues identified by the Hay Davison report, it found that self-regulation and market self-discipline had failed to develop, and that the Commissioner for Securities had lost effective control in its oversight of the market. While the standards of CG were being affected by these changes, it had not significantly evolved.

That began to change as Hong Kong moved toward a modernization of its corporate law, which had seen piecemeal development that left it progressively out of date since its introduction in 1933. The first attempts in the mid 1990s to create «an ordinance for the 21st century» were largely unsuccessful following the issuance of the Pascutto Report in 1997. In 2006, the Financial Services and Treasury Bureau launched a complete rewrite that led to the present Companies Ordinance coming into effect in 2014.

In tandem with the attention being given to the companies' legislation, CG standards also began to receive more attention, starting with financial disclosures which were expanded notably in 1994, 1998 and 2000. The recognition of the need to enhance CG standards more broadly to keep abreast of global standards was an important theme of the Hong Kong Exchange and Clearing Limited's (HKEX) January 2002 Consultation Paper. In addition to disclosures, its focus was shareholder rights and director and board practices. This led to a raft of CG related developments including the introduction in 2004 of a new Chapter 14A that expanded on the existing connected transactions rules and the requirement that each listed issuer's board possess three independent non-executive directors (INEDs). In 2005, the gateway functions expected to be performed by sponsors, compliance advisers and independent financial advisers were developed. The regulation of the sponsor and compliance adviser undertaking being wholly transferred to the SFC in 2007 under the umbrella of their regulation of intermediaries. The SEHK's first Code of Best Practice for listed issuers had been issued in 1993, then replaced in 2005 by the Code of Corporate Governance Practices and Rules on the Corporate Governance Report, which in turn was the precursor to (and later renamed in 2012 to) the Corporate Governance Code.

An important development in the regulatory architecture of the listed market occurred in 2003 with the introduction of the Securities and Futures Ordinance (SFO). Subsidiary legislation to the SFO, the Securities and Futures (Stock Market Listing) Rules, established a dual filing regime that also provided the SFC with regulatory oversight of listing applications as well as listed issuers. It also provided the SFC with powers based around disclosures filed with the SFC and the interests of the public market. While such powers were introduced as «reserve powers», the interpretation of this term is now controversial, a point that shall be returned to later in this Report. However, despite this power, and various other developments in the listing rules in the modern era, the issue of the effective enforcement of the listing rules remains a problem the market has been struggling with since at least the 1990s, if not earlier. As a former Chairman of the HKEX succinctly put it in 2001, «The rules must be fair. They must be clear. They must be sensible. And they must be enforced properly. If not enforced properly, rules become meaningless.» Subsequent sections of this Report will return to this important issue.

The foregoing is of course merely a brief overview of some of the notable domestic drivers leading to the current CG system in Hong Kong - these, together with more recent developments in Hong Kong, are the subject of later sections of this Report. However, many of the developments reviewed above must also be seen in the context of global processes, a topic that is of particular interest to this study given its comparative element.

 

Содержание отчета

Executive summary
Executive Summary I Key Findings
Executive Summary II Summary of Recommendations
Executive Summary III Approach to the Study
Executive Summary IV Abridged Text of the Analysis

1 Introduction to the study and its purposes
Introduction
1.1 Purpose of this Report
1.2 The development of CG in Hong Kong
1.2.1 Domestic drivers
1.2.2 Global drivers
1.3 Structure of this Report
1.3 Structure of this Report
1.3.1 Methodology
1.3.2 Analysis
1.3.3 Recommendations
1.4 Scope and limitations of this Report
1.5 Next steps

2 Methodology
Introduction
2.1 Scope
2.1.1 CG concepts
2.1.2 CG Geographic reach
2.1.3 CG mechanisms
2.2 Work process
2.2.1 Data collection
2.2.2 Initial data organization
2.2.3 Oral evidence
2.2.4 Parity check
2.2.5 Analysis
2.2.6 recommendations

3 Discussion and analysis of jurisdictions studied
Introduction
3.1 Overarching considerations
3.1.1 Thematic topics
3.1.2 Trends in regulating CG standards
3.1.3 The role of culture
3.1.4 The methodology of assessment
3.1.5 Cost-benefit considerations
3.1.6 Maintaining competitiveness
3.1.7 Effectiveness
3.2 Non-locally incorporated companies
3.2.1 Application of local laws and regulations
3.2.2 Cross border enforcement and cooperation
3.3 Information
3.3.1 Legal status of CG disclosures
3.3.2 Disclosure of listing rule compliance
3.3.3 Board evaluation
3.3.4 Audit committee
3.4 Involvement
3.4.1 Shareholder stewardship
3.4.2 Shareholder votes
3.4.3 Remuneration
3.4.4 Changes of control
3.5 Equality
3.5.1 Voting rights generally
3.5.2 Weighted voting rights
3.6 Accountability
3.6.1 Information disclosures generally
3.6.2 Listing rules
3.6.3 Board refreshment
3.6.4 Appointment of independent directors
3.7 Effectiveness
Part A - CG system design
3.7.1 Impact of regulatory design
3.7.2 Policy development agencies
3.7.3 Enforcement agencies
3.7.4 Audits of public companies
3.7.5 Duties of directors
3.7.6 Role of fiduciary law
Part B - Specific actions
3.7.7 Differentiation of CG requirements
3.7.8 Listing regime standards upon entry
Part C - Independent directors
3.7.9 Determination of independence
3.7.10 Requirements relating to INED performance
3.7.12 Empowerment of INEDs - controlling shareholders
Part D - Other items
3.7.13 Whistle-blowing
3.8 Coda

4 Recommendations
Introduction and approach to the recommendations
Part A - The board
4.1 Processes
4.2 Independent directors
4.3 CG standards
Part B - Enforcement
4.4 Shareholders
4.5 CG disclosures
4.6 Regulators
4.7 Ex ante mechanisms
Part C - Architecture and policy
4.8 Architecture
4.9 Policy
4.10 Summary tables

5 Concluding remarks
5.1 The Recommendations
5.2 The Hong Kong market

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