New Corporate Governance Code and Associated Listing Rule Amendments

The Stock Exchange of Hong Kong Limited (the Exchange) published a “Consultation Paper on Review of the Code on Corporate Governance Practices and Associated Listing Rules” on 18 December 2010. The consultation paper proposed for amendments to the Corporate Governance Code and the Listing Rules pertaining to corporate governance, as well as plainer language amendments to improve the clarity, certainty and efficacy of the Listing Rules. The amendments aimed to keep the Corporate Governance Code in line with international best practices. The consultation lasted for a period of 3 months.

On 28 October 2011, the Exchange published its “Consultation Conclusions on Review of the Corporate Governance Code and Associated Listing Rules” after receiving feedback submissions from respondents including listed issuers, market practitioners, and professional and industry association. Given the broad market support, the Exchange adopted most of the proposals outlined in the consultation paper, subject to certain modifications further made in the consultation conclusions. The amendments will be gradually effective in 2012, with the key dates summarized as below:

• most rule amendments that do not impose administrative burden on the issuers have been effective on 1 January 2012;
• the revised code provision and certain rules that related to the revised code which require the issuers to act have been effective on 1 April 2012;
• the new rule which impose the requirement that INEDs must represent at least one third of the board, must be complied with by the issuers by 31 December 2012; and
• the new rule which require company secretary training will be staggered according to the appointment of the company secretary.

Full details of the new and revised Corporate Governance Code and amendments to the associated Listing Rules can be found in the website of the Exchange:

http://www.hkex.com.hk/eng/rulesreg/listrules/listpresent/Documents/cgcra_201112.pdf

The successful combined adoption of the Listing Rules, Corporate Governance Code Provisions and Recommended Best Practices is believed to give flexibility to issuers and to also protect investors and the integrity of the stock market in Hong Kong.