Exchange Publishes Conclusions on Review of Corporate Governance Code
Release Date: 2021-12-10
Question 1
Do you agree with our proposal to introduce a CP requiring an issuer’s board to set culture in alignment with issuer’s purpose, value and strategy?
Increasing transparency and consistency helps small shareholders and potential small shareholders to trust and understand the company.
Question 2a
Do you agree with our proposal to introduce a CP requiring establishment of an anti-corruption policy?
Yes
Please give reasons for your views.
This helps to enhance a culture of integrity in business.
Question 2b
Do you agree with our proposal to upgrade a Recommended Best Practice ("RBP") to CP requiring establishment of a whistleblowing policy?
Yes
Please give reasons for your views.
This helps to protect and not infringe on the interests of small shareholders.
Question 3
Do you agree with our proposal to introduce a CP requiring disclosure of a policy to ensure independent views and input are available to the board, and an annual review of the implementation and effectiveness of such policy?
No
Please give reasons for your views.
The board and its senior management may have differing views on the same issue; hiring independent consultants to provide perspectives and opinions is a policy, but it should not be mandatory.
Question 4a
Do you agree with our proposal regarding re-election of an independent non-executive director serving more than nine years ("Long Serving INEDs") to revise an existing CP to require (i) independent shareholders’ approval; and (ii) additional disclosure on the factors considered, the process and the board or nomination committee's discussion in arriving at the determination in the explanation on why such Long Serving INED is still independent and should be re-elected?
No
Please give reasons for your views.
Similar functions may have term limits for local leaders due to political checks and balances, but this may not apply to listed companies and independent non-executive directors. This is a commercial operating group; as long as there is public disclosure of whether there are term limits, there is no need to set restrictions.
Question 4b
Do you agree with our proposal to introduce a CP requiring an issuer to appoint a new independent non-executive director ("INED") at the forthcoming annual general meeting where all the INEDs on the board are Long Serving INEDs, and disclosing the length of tenure of the Long Serving INEDs on the board on a named basis in the shareholders’ circular?
Yes
Please give reasons for your views.
This helps small shareholders/potential shareholders understand each board member, including independent non-executive directors, which aids in understanding the company culture.
Question 5
Do you agree with our proposal to introduce a new RBP that an issuer generally should not grant equity-based remuneration (e.g. share options or grants) with performance-related elements to INEDs as this may lead to bias in their decision-making and compromise their objectivity and independence?
Yes
Please give reasons for your views.
This helps ensure that independent non-executive directors maintain their oversight of the listed company; similarly, the regulatory authority's intention regarding compliance officers/internal lawyers of licensed companies not holding licenses is to avoid conflicts in oversight duties.
Question 6a
Do you agree with our proposal to highlight that diversity is not considered to be achieved by a single gender board in the note of the Rule?
No
Please give reasons for your views.
Regulating gender diversity does not help enhance corporate governance and does not constitute gender discrimination; the principle of meritocracy should prevail.
Question 6b
Do you agree with our proposal to introduce a Mandatory Disclosure Requirement ("MDR") requiring all listed issuers to set and disclose numerical targets and timelines for achieving gender diversity at both: (a) board level; and (b) across the workforce (including senior management)?
No
Please give reasons for your views.
Mandating gender diversity does not contribute to improving corporate governance and does not constitute gender discrimination; the principle of meritocracy should be upheld.
Question 6c
Do you agree with our proposal to introduce a CP requiring the board to review the implementation and effectiveness of its board diversity policy annually?
Yes
Please give reasons for your views.
This is a trivial matter.
Question 6d
Do you agree with our proposal to amend the relevant forms to include directors’gender information?
No
Please give reasons for your views.
Increasing the gender information of directors involves gender discrimination.
Question 7
Do you agree with our proposal to upgrade a CP to Rule requiring issuers to establish a nomination committee chaired by an INED and comprising a majority of INEDs?
No
Please give reasons for your views.
This does not help improve the corporate governance of listed companies.
Question 8
Do you agree with our proposal to upgrade a CP to a MDR to require disclosure of the issuer’s shareholders communication policy (which includes channels for shareholders to communicate their views on various matters affecting issuers, as well as steps taken to solicit and understand the views of shareholders and stakeholders) and annual review of such policy to ensure its effectiveness?
Yes
Please give reasons for your views.
It helps small shareholders understand the corporate governance of their company.
Question 9
Do you agree with our proposal to introduce a Rule requiring disclosure of directors’ attendance in the poll results announcements?
No
Please give reasons for your views.
Disclosing the attendance records of directors on the day does not hold any meaning for small shareholders.
Question 10
Do you agree with our proposal to delete the CP that requires issuers to appoint non-executive directors for a specific term?
Yes
Please give reasons for your views.
It helps improve the level of corporate governance.
Question 11
Do you agree with our proposal to elaborate the linkage in the Code by (a) setting out the relationship between corporate governance and environmental, social and governance ("ESG") in the introductory section; and (b) including ESG risks in the context of risk management under the Code?
Yes
Please give reasons for your views.
It helps small shareholders understand the governance of their listed companies.
Question 12
Do you agree with our proposal to amend the Rules and the ESG Guide to require publication of ESG reports at the same time as publication of annual reports?
No
Please give reasons for your views.
Producing the annual report is already a busy task for listed company employees. If it is simultaneously required to issue an ESG report, it could negatively impact the quality of the annual report. Our association does not agree with publishing it simultaneously with the annual report and suggests maintaining the current guideline to issue the ESG report within four months after the annual report is published.
Question 13
Do you have any comments on how the re-arranged Code is drafted in the form set out in Appendices III and IV to the Consultation Paper and whether it will give rise to any ambiguities or unintended consequences?
No
Please give reasons for your views.
It is recommended to enhance clarity.
Question 14
In addition to the topics mentioned in the Consultation Paper, do you have any comments regarding what to be included in the new guidance letter on corporate governance (i.e. CG GL) which may be helpful to issuers for achieving the Principles set out in the Code?
No
Please give reasons for your views.
No comments.
Question 15a
Do you agree with our proposed implementation dates for all proposals (except the proposals on Long Serving INED): the financial year commencing on or after 1 January 2022?
No
Please give reasons for your views.
The timeline is too tight. It is suggested to implement it after five years.
Question 15b
Do you agree with our proposed implementation dates for proposals on Long Serving INED: the financial year commencing on or after 1 January 2023?
No
Please give reasons for your views.
Following previous similar responses, our association does not support the mandatory implementation of a term limit for independent directors, hence we similarly do not agree with this issue.
Do you agree with our proposal to introduce a CP requiring an issuer’s board to set culture in alignment with issuer’s purpose, value and strategy?
Increasing transparency and consistency helps small shareholders and potential small shareholders to trust and understand the company.
Question 2a
Do you agree with our proposal to introduce a CP requiring establishment of an anti-corruption policy?
Yes
Please give reasons for your views.
This helps to enhance a culture of integrity in business.
Question 2b
Do you agree with our proposal to upgrade a Recommended Best Practice ("RBP") to CP requiring establishment of a whistleblowing policy?
Yes
Please give reasons for your views.
This helps to protect and not infringe on the interests of small shareholders.
Question 3
Do you agree with our proposal to introduce a CP requiring disclosure of a policy to ensure independent views and input are available to the board, and an annual review of the implementation and effectiveness of such policy?
No
Please give reasons for your views.
The board and its senior management may have differing views on the same issue; hiring independent consultants to provide perspectives and opinions is a policy, but it should not be mandatory.
Question 4a
Do you agree with our proposal regarding re-election of an independent non-executive director serving more than nine years ("Long Serving INEDs") to revise an existing CP to require (i) independent shareholders’ approval; and (ii) additional disclosure on the factors considered, the process and the board or nomination committee's discussion in arriving at the determination in the explanation on why such Long Serving INED is still independent and should be re-elected?
No
Please give reasons for your views.
Similar functions may have term limits for local leaders due to political checks and balances, but this may not apply to listed companies and independent non-executive directors. This is a commercial operating group; as long as there is public disclosure of whether there are term limits, there is no need to set restrictions.
Question 4b
Do you agree with our proposal to introduce a CP requiring an issuer to appoint a new independent non-executive director ("INED") at the forthcoming annual general meeting where all the INEDs on the board are Long Serving INEDs, and disclosing the length of tenure of the Long Serving INEDs on the board on a named basis in the shareholders’ circular?
Yes
Please give reasons for your views.
This helps small shareholders/potential shareholders understand each board member, including independent non-executive directors, which aids in understanding the company culture.
Question 5
Do you agree with our proposal to introduce a new RBP that an issuer generally should not grant equity-based remuneration (e.g. share options or grants) with performance-related elements to INEDs as this may lead to bias in their decision-making and compromise their objectivity and independence?
Yes
Please give reasons for your views.
This helps ensure that independent non-executive directors maintain their oversight of the listed company; similarly, the regulatory authority's intention regarding compliance officers/internal lawyers of licensed companies not holding licenses is to avoid conflicts in oversight duties.
Question 6a
Do you agree with our proposal to highlight that diversity is not considered to be achieved by a single gender board in the note of the Rule?
No
Please give reasons for your views.
Regulating gender diversity does not help enhance corporate governance and does not constitute gender discrimination; the principle of meritocracy should prevail.
Question 6b
Do you agree with our proposal to introduce a Mandatory Disclosure Requirement ("MDR") requiring all listed issuers to set and disclose numerical targets and timelines for achieving gender diversity at both: (a) board level; and (b) across the workforce (including senior management)?
No
Please give reasons for your views.
Mandating gender diversity does not contribute to improving corporate governance and does not constitute gender discrimination; the principle of meritocracy should be upheld.
Question 6c
Do you agree with our proposal to introduce a CP requiring the board to review the implementation and effectiveness of its board diversity policy annually?
Yes
Please give reasons for your views.
This is a trivial matter.
Question 6d
Do you agree with our proposal to amend the relevant forms to include directors’gender information?
No
Please give reasons for your views.
Increasing the gender information of directors involves gender discrimination.
Question 7
Do you agree with our proposal to upgrade a CP to Rule requiring issuers to establish a nomination committee chaired by an INED and comprising a majority of INEDs?
No
Please give reasons for your views.
This does not help improve the corporate governance of listed companies.
Question 8
Do you agree with our proposal to upgrade a CP to a MDR to require disclosure of the issuer’s shareholders communication policy (which includes channels for shareholders to communicate their views on various matters affecting issuers, as well as steps taken to solicit and understand the views of shareholders and stakeholders) and annual review of such policy to ensure its effectiveness?
Yes
Please give reasons for your views.
It helps small shareholders understand the corporate governance of their company.
Question 9
Do you agree with our proposal to introduce a Rule requiring disclosure of directors’ attendance in the poll results announcements?
No
Please give reasons for your views.
Disclosing the attendance records of directors on the day does not hold any meaning for small shareholders.
Question 10
Do you agree with our proposal to delete the CP that requires issuers to appoint non-executive directors for a specific term?
Yes
Please give reasons for your views.
It helps improve the level of corporate governance.
Question 11
Do you agree with our proposal to elaborate the linkage in the Code by (a) setting out the relationship between corporate governance and environmental, social and governance ("ESG") in the introductory section; and (b) including ESG risks in the context of risk management under the Code?
Yes
Please give reasons for your views.
It helps small shareholders understand the governance of their listed companies.
Question 12
Do you agree with our proposal to amend the Rules and the ESG Guide to require publication of ESG reports at the same time as publication of annual reports?
No
Please give reasons for your views.
Producing the annual report is already a busy task for listed company employees. If it is simultaneously required to issue an ESG report, it could negatively impact the quality of the annual report. Our association does not agree with publishing it simultaneously with the annual report and suggests maintaining the current guideline to issue the ESG report within four months after the annual report is published.
Question 13
Do you have any comments on how the re-arranged Code is drafted in the form set out in Appendices III and IV to the Consultation Paper and whether it will give rise to any ambiguities or unintended consequences?
No
Please give reasons for your views.
It is recommended to enhance clarity.
Question 14
In addition to the topics mentioned in the Consultation Paper, do you have any comments regarding what to be included in the new guidance letter on corporate governance (i.e. CG GL) which may be helpful to issuers for achieving the Principles set out in the Code?
No
Please give reasons for your views.
No comments.
Question 15a
Do you agree with our proposed implementation dates for all proposals (except the proposals on Long Serving INED): the financial year commencing on or after 1 January 2022?
No
Please give reasons for your views.
The timeline is too tight. It is suggested to implement it after five years.
Question 15b
Do you agree with our proposed implementation dates for proposals on Long Serving INED: the financial year commencing on or after 1 January 2023?
No
Please give reasons for your views.
Following previous similar responses, our association does not support the mandatory implementation of a term limit for independent directors, hence we similarly do not agree with this issue.