HKICS “Corporate Governance at the Crossroads” Conference Opening Remarks. Paul Chow Chief Executive, HKEx 8 January 2008 (Tuesday). Conference Programme. Speeches :
Chief Executive, HKEx
8 January 2008 (Tuesday)
Checks & balances
Highly concentrated corporate ownership
Many non-Hong-Kong-based companies
“Corporate Governance and Market Valuation in China”
Frank Song, Chong-En Bai, Qiao Liu, Joe Lu & Junxi Zhang
The research paper found that the average market valuation of Mainland companies rated in the top 20% in terms of corporate governance practices was 41% to 67% higher than
those in the bottom 20%.
Elements of the disclosure-based regulatory regime in Hong Kong
Continual obligations of listed issuers & directors
Corporate scandals (Enron, Worldcom, etc.)
Higher expectations from investors
Evolution & convergence of international best practices & standards
Intense competition for business and funding
1993 – 2000
1993 – 2000
1993 – 2000
Revised Code on Corporate Governance Practices & Corporate Governance Report
What did we do?
What did we find?
1993 – 2000
“Hong Kong has moved into first place for a range of reasons, one of which is that it continues to grapple with some difficult reform issues and its regulatory officials are well aware of the distance between local norms and international standards.” (pp. 16, CG Watch 2007)
Primary market development
Secondary market development
Market Quality Enhancement
Strategic Theme 2007-09
Focus of 2007/08
Milestone achieved: The Electronic Disclosure Regime for listed company announcements was launched on 25 June 2007. Listed companies’ announcements are now submitted to HKEx electronically and are available to investors on the HKEx website.
Next step: Phase 2 of EDP effective from 25 December 2007. A statement will then be issued to conclude the 2002 consultation exercise.
Abolition of Paid Issuer Announcement
Milestone achieved: Preparation for the infrastructure and content well underway.
Next step: A dedicated issuer website with separate internet infrastructure from the HKEx website will be launched in early 2008 to provide the public with current and archived issuer related information and announcements.
Designated Issuer Website
Milestone achieved: On 5 November 2007, the SFC and HKEx published a joint policy statement on a pilot scheme for posting a WPIP. Effective 1 January 2008, WPIP must be submitted to the Exchange for posting on the HKEx website before information about the listing applicant is first provided to institutional investors.
Next step: Codification of the requirement in the Listing Rules after the pilot scheme.
Web Proof Information Pack (“WPIP”)
Milestone achieved: Consultation period ended 5 November 2007. Consultation proposed:
Next step: Analysis of responses, further data gathering and testing of the substance of arguments under way.
Financial Reporting Consultation
Next step: In November 2007 the Listing Committee approved the proposal for issuers to publish price sensitive announcements in the morning and lunchtime publication windows without the need to impose a suspension.
Subject to SFC approval, changes will likely to be implemented by the end of 1Q2008. Market education and communication are being prepared.
Changes in Suspension Policy
Next step: To be issued in January 2008 to consult on a total of 18 items related to listing policies and corporate governance, such as:
Pursuant to a G-7 mandate to the OECD and World Bank, the OECD organises the Asian Roundtable on Corporate Governance to support corporate governance reforms in Asia.
The Roundtable comprises Asian policy-makers, regulators and business leaders, as well as regional and international experts.
This year’s Asian Roundtable on Corporate Governance will be held in Hong Kong on 13-14 May 2008 (Tuesday-Wednesday).
Corporate Governance Standards
Thank you stop…