Hong Kong Mulling Corporate Governance Law Reforms

by Mary Swire, for LawAndTax-News.com, Hong Kong

10 June 2003

According to a report in the South China Morning Post, a package of proposed measures designed to improve corporate governance in Hong Kong is set to be unveiled by the government-appointed Standing Committee on Company Law Reform on Wednesday.

An unnamed source close to the Committee told the SAR-based newspaper that the package will include measures to prevent large shareholders from stripping companies of their assets, suggestions for improving transparency with regard to director renumeration, and proposals designed to stop the same company executive acting as both chairman and chief executive.

Although the Committee is thought to be examining a proposal which would require the pay of all directors to be approved by small shareholders in their company, this will not be included in Wednesday's package, the source revealed.

However, the Standing Committee is expected to suggest that Hong Kong Exchanges and Clearing (HKEx) reconsider a previously discarded plan to require firms to disclose director renumeration by name, rather than by merely revealing the number of directors at each different salary level.

'The disclosure requirement of directors' renumeration is not good enough. Small shareholders should have the right to know how much has been paid to particular directors by name,' the source told the SCMP on Monday.

The Committee is also reportedly expected to propose that a study be conducted to examine whether the Companies Registry should merge with the Securities and Futures Commission (SFC) in order to create one corporate regulator.

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