10 October 2012
On 7 September 2012, Hong Kong Exchanges and Clearing Limited (HKEx) published its "Consultation Paper - Board Diversity" (Consultation Paper) to set out the proposed amendments about board diversity to Appendix 14 (Corporate Governance Code (Code) and Corporate Governance Report) to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.
The major purposes of the proposed amendments are to promote effective decision-making and better governance and monitoring through diversity in the boardroom. It is proposed that diversity will be given a wide interpretation and no criteria will be prescribed to define its meaning. An issuer should take into account various factors to achieve boardroom diversity depending on its own business model and circumstances, including gender, age, cultural and educational background and professional experience.
Comments in response to the Consultation Paper should be submitted by 9 November 2012.
The major proposals contained in the Consultation Paper are:
- Including "diversity of perspectives" in the Code's Principle for "Board Composition" – Accordingly, the board should have a balance of skills, experience and diversity of perspectives appropriate to the requirements of the issuer's business.
- Introducing a Code Provision to implement a diversity policy – Subject to the "comply" or "explain" principle (i.e., an issuer can choose either to comply or explain its non-compliance with the provision in the corporate governance report), the nomination committee (or the board) should have a policy concerning diversity in the boardroom. It should disclose the policy or a summary of the policy in the corporate governance report.
- Disclosure in the corporate governance report – If the nomination committee (or the board) has a diversity policy, it should disclose the policy or a summary of the policy in the corporate governance report. It should also explain:
- any measurable objectives which it has set for implementing the policy; and
- the progress on achieving those objectives.
You may download copies of the Consultation Paper via the link below:
For inquiries related to this Legal Update, please contact Jeckle Chiu,
or your usual contacts with our firm.