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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Четверг, 16 мая 2019

3. Discussion and analysis of jurisdictions studied. 3.5.1 Voting rights generally

Probably one of the most striking differences across the jurisdictions studied is the issue of the equality of voting rights that attach to shares. While the United States permits companies to list with WVR, both the FCA in the UK and the SFC in Hong Kong have expressed, quite strongly, that the one-share-one-vote (OSOV) principle is a cornerstone of investor protection, as discussed in Appendix I.4.1. Singapore has amended its CA: section 64A now allows public companies to issue shares of different classes. However, the question of allowing WVR structures to list remains under discussion. Notwithstanding Hong Kong's continued adherence to the OSOV principle, companies can be incorporated under the Hong Kong CO with different classes of shares having different rights attached - they just cannot obtain a listing on the SEHK. The position in Hong Kong then must be understood as an issue only of concern to public companies, presumably given the considerable degree of anonymity associated with freely tradable shares, and the impact of any abuse of a supervoting right on members of the public.

While this distinction is clear cut in terms of the powers of and limitations imposed on the issuers setting the rights attached to shares, and the approach to regulating such rights, the distinction is far less clear when shareholder voting rights are examined from the point of the ability to exercise them. Regulators have imposed on issuers requirements that in effect either disenfranchise a shareholder of a right to exercise a vote attaching to share, or give additional rights to some shareholders not others. This is usually imposed as a means of creating a separate vote on a relevant matter. For example, the SEHK's listing rules require shareholders with an interest in certain notifiable and connected transactions to abstain from voting on a resolution to approve the transaction and the Code on Takeovers and Mergers requires both delistings and takeovers executed by way of schemes of arrangement to be approved by shareholders not connected with the offeror. In the UK, as part of the broader requirement that an issuer should be capable of acting independently, the listing rules require that companies with a controlling shareholder must make the appointment of independent directors subject to a dual voting procedure that gives independent shareholders a special vote. While this can be implemented purely as a regulatory measure - leaving the legal rights of shareholders intact, in the UK it has been implemented by the FCA's listing rules requiring listed issuers with controlling shareholders to make appropriate amendments to their constitutional documents (see Appendix II.1.2). The position in the UK is further discussed in Section 3.4 «Involvement». In Hong Kong, the SEHK may require changes to the articles of foreign companies to provide for similar provisions as apply under the CO in respect of the rights of shareholders but this is only set out as a precondition to a listing applicant being regarded as suitable, as discussed in Section 3.2.1 «Application of local laws and regulations».

Where such changes have the effect of curbing the equality of rights of all shareholders, whether via changes to the articles of the company or via regulatory requirements, it must be recognized this represents a deviation from the OSOV principle. This is an example of the concerns of public regulation overriding rights attaching to shares otherwise enjoyed in the private law context. To be a justifiable exercise of public regulation, there must be an important principle at stake - in these cases it is the wish to protect minority shareholders from abuse in a context where conflicted shareholders may exercise their votes to benefit themselves at the expense of their interests as shareholders in the company. Accordingly, where that risk may be dealt with via other means, there is a lesser argument for such public regulation-based adjustments to voting rights.


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
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
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
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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