An online independent corporate governance watchdog, www.webb-site.com, has called upon the Hong Kong government to create a minority shareholders' association to monitor the corporate behaviour of controlling shareholders, with the legal power to sue companies found guilty of market misconduct. Entitled the Hong Kong Association of Minority Shareholders (HKAMS), the organisation would be funded by a tax that could be imposed on market transactions.
The proposal is the idea of David Webb, editor of webb-site.com and retired investment banker, who told the Financial Times: 'At present, corporate governance reform is hampered by the lack of an authoritative shareholder voice to oppose vested interests and seek reform, to enforce litigation rights and to incentivise good corporate governance.'
Mr Webb's proposal emerged from a debate in Hong Kong over ways to improve corporate governance and market regulation, both of which are well known for not meeting the same standards as their western counterparts. Mr Webb said Hong Kong had been lagging behind in international best practice on many areas from regulation to voting processes.
Mr Webb said it has become clear that Hong Kong's securities market is in desperate need of more legal powers. For instance, Hong Kong's securities law does not facilitate class action lawsuits or punitive damages as does the United States.
Mr Webb proposes that the HKAMS would comprise lawyers, accountants and other professional practitioners who would take up issues affecting minority shareholders and campaign on their behalf, issuing league tables of companies based on their corporate governance practices and pursuing legal action accordingly.
Currently Hong Kong's legislative council, Legco, is finalising its draft of a new securities and futures bill that aims to bring the industry's existing legislation into one comprehensive whole that includes strengthened and tightened rules covering shareholder behaviour and corporate governance. But Mr Webb insists that an independent body such as the HKAMS is needed to monitor those practices. Webb-site.com states it is an 'independent non-profit commentary on Hong Kong's corporate and economic governance.'
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