HKEX Consultation Paper on Review of Corporate Governance Code and Related Listing Rules


HKGFA supports the consultation paper by The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX) outlining proposed enhancements to the Corporate Governance Code and Corporate Governance Report (the Code), as well as related amendments to the Listing Rules. We encourage HKGFA members to submit your individual views to the Exchange and share your opinion with HKGFA for consolidations through

The deadline for responding to the Consultation Paper to the Exchange is 18 June 2021 (Fri).

Interested parties are encouraged to respond to the Consultation Paper by completing and submitting the questionnaire.


Further details below regarding the consultation. Source: Hong Kong Exchanges and Clearing Limited (HKEX)

The proposals include new measures aimed at further enhancing corporate governance standards among listed issuers in Hong Kong, specifically in the areas of corporate culture, director independence, diversity, and in Environmental, Social and Governance (ESG) disclosures and standards.

“At HKEX, we are committed to enhancing the quality of our market, and this consultation focuses on improving a range of corporate governance standards. Our proposals emphasise instilling change in mindset of issuer’s boards, promoting board independence, board refreshment and succession planning, as well as improving board diversity amongst Hong Kong issuers, helping to enhance Hong Kong’s position as a leading ESG hub in Asia,” said Bonnie Y Chan, HKEX’s Head of Listing.

Key proposals include:

(a) Corporate culture –
(i) Align company’s culture with its purpose, values and strategy; and
(ii) require issuers to have anti-corruption and whistleblowing policies (New Code Provisions (CP), subject to a “comply or explain” basis).
(b) Board independence, refreshment and succession planning –
(i) Require issuers to have a policy to ensure independent views are available to the board, and annual review of its effectiveness (New CP).
(ii) Require independent shareholders’ approval for re-election of an independent non-executive director (INED) serving more than nine years (Long Serving INED) and additional disclosure1 (Revised CP).
(iii) If all INEDs on the board are Long Serving INEDs, require appointment of a new INED at the forthcoming AGM, and disclose the length of tenure of the Long Serving INEDs on a named basis (New CP).
(iv) Mandatory Nomination committee, chaired by an INED and comprising a majority of INEDs (Upgraded to a Listing Rule).
(c) Diversity –
(i) Single gender board is not considered to be a diverse board;
(ii) mandatory numerical targets and timelines for achieving gender diversity at both board level and across the workforce (New Mandatory Disclosure Requirement (MDR) under the Code); and
(iii) requirements for boards to review progress of diversity policy annually (New CP). After the revised Rules take effect, existing issuers with single gender boards will be allowed a three-year transition period to appoint at least one director of the absent gender on their boards. IPO applicants are not expected to have single gender boards.
(d) Communication with shareholders –
Mandatory disclosure on shareholders communication policy, and annual review of its effectiveness (Upgraded to MDR).
(e) ESG –
Align publication timeframe of ESG reports with annual reports (Revised Rule and ESG Guide2).


The Exchange’s new ESG reporting requirements (effective from July 2020) have incorporated certain important elements of the Task Force on Climate-related Financial Disclosures (TCFD) Recommendations3. In late 2020, the Hong Kong Government announced its aim to achieve carbon neutrality by 2050, and the Green and Sustainable Finance Cross-Agency Steering Group4 announced the initiative towards mandatory TCFD-aligned climate-related disclosures by 2025. The Exchange encourages issuers to adopt the TCFD Recommendations when disclosing climate change-related information under the ESG Guide, and will provide further guidance in this regard.

Governance and oversight of ESG matters and management of material ESG risks is an integral part of good corporate governance. Therefore, the Exchange is revising the Code to elaborate the linkage between corporate governance and ESG. To further facilitate issuers’ compliance with the Code and achieving high standards in corporate governance, the Code will also be re-arranged to improve the flow and readability.


  1. Disclosure on factors considered, the process and board or nomination committee’s discussion in arriving at the determination in the explanation on why such INED is still independent and should be re-elected.
  2. ESG Reporting Guide as set out in Appendix 27 to the Main Board Listing Rules and Appendix 20 to the GEM Listing Rules.
  3. For details, please refer to the TCFD website.
  4. A steering group initiated by the Hong Kong Monetary Authority and the Securities and Futures Commission with members including the Environment Bureau, the Financial Services and the Treasury Bureau, HKEX, the Insurance Authority and the Mandatory Provident Fund Schemes Authority.

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