May 2018, 705 pp
Introduction (Executive Summary)
Hong Kong’s emergence as a global financial centre has brought far greater attention to
its role in the global market place and the standards it engages as compared to other
leading global centres. Markets compete on a range of factors, amongst which the
corporate governance (CG) system is of particular importance because it impacts on
market integrity, and hence market success. Where the affairs of publicly listed
companies are undertaken in a way that fall short of expected CG standards, or where
the mechanisms of control and redress are inadequate to curb misbehaviour, confidence
in the market may be damaged, and the market becomes less efficient. CG is therefore
an integral part of a market that a CG system must serve.
This Report was commissioned by the Hong Kong Institute of Certified Public
Accountants (HKICPA) to make recommendations on how Hong Kong’s CG system may
be further developed to improve the long-term competitiveness of the Hong Kong public
market. The recommendations are to be based on an independent, comparative study of
shareholder rights, remedies and protections and board processes within the context of
public listed companies. As many listed issuers are not incorporated in Hong Kong this
presents special issues as regards standard setting and enforcement.
To assess the strengths and weaknesses of Hong Kong’s CG system in the global
context, this study investigated the CG system in Hong Kong and each of the United
Kingdom (UK), the United States, Mainland China and Singapore. The CG system in each
of these jurisdictions has undergone developments and experiences, successes and
failures that are shaped by its historical, political, legal, market, and social and cultural
contexts. The different influences of these factors are important to recognize for the
purposes of forming recommendations within a Hong Kong framework – what works, or
fails, in one jurisdiction might fail, or work, in another.
The comparative analysis undertaken in this Report has led to a total of 28
recommendations being put forward. Reflecting one of the guiding concepts of this study
to produce practical and implementable recommendations, only two require a change to
legislation, with another four possibly requiring legislative change subject to the outcome
of a further consultative process. All recommendations are consistent with overarching
objectives of fostering competition and regulatory efficiency.
The remainder of this Part I of the Executive Summary provides an overview of the
study’s main findings. Part II outlines each recommendation made and provides a
summary Table of all recommendations found in Section 4 of this Report. Part III
summarizes the approach taken to the topic of CG and the formation of
recommendations. Part IV summarizes the analysis that gives rise to the 28
recommendations via an abridged text of the detailed analysis found in Section 3 of this
Report...
For media coverage of this Report, see SCMP and CFO Innovations. To download the full report, click here.
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