Regulations

China Updates

February 2009

KPMG held discussions with a number of company representatives in Shanghai, Guangzhou, Shenzhen and Chengdu to obtain an understanding of the current state of their enterprises’ internal control systems; the management’s general awareness and understanding of the prevailing internal control rules and regulations, in particular the Basic Standard for Enterprise Internal Control; and the difficulties and challenges of implementing internal control systems in their respective companies. Based on our understanding of the Basic Standard, KPMG has set out a compliance roadmap and other possible assistance for listed enterprises to consider.  Please refer to the February 2009 China Boardroom Update for details.

August 2008

Five Chinese government authorities and regulatory bodies have jointly issued a circular on 28 June 2008 on the release of The Basic Standard for Enterprise Internal Control, dated 22 May 2008 (企业内部控制基本规范; “The Basic Standard”). This issue of China Boardroom Update discusses the newly released Basic Standard and its implications for Chinese enterprises. For more details, please click here.

June 2006

In order to enhance the quality of enterprise management and competitiveness as well as maintain the stability of growth, the State-owned Assets Supervision and Administration Commission of the State Council issues the Guidelines for State-owned Enterprise Risk Management.  This guideline requires state-owned enterprises to implement an effective enterprise risk management (“ERM”) program. For more details, please click here (in Chinese).

October 2008

The China Insurance Regulatory Commission (“CIRC”) has issued a circular dated 20 August 2008 regarding the risk assessment of insurer asset management. Insurers are required to submit a report on quantitative risk analyses, including a calculation of risk metrics and stress testing by 25 August 2008. They are also required to submit a report detailing a qualitative self-assessment of operational procedures by 31 August 2008. In addition, the circular requires insurers to prepare for a walk-through of their asset management process, which is to be conducted by the CIRC between August and November 2008. For more details, please click here.

March 2002

Click here for an article titled Recent Corporate Governance developments in China, written by KPMG Partner Stephen Lee. This article was first published in Banking Today, March / April 2002 issue.

Hong Kong Updates

January 2009

The Listing Rules have been amended to remove the requirement for a qualified accountant. The code provisions of Appendix 14 - Code on Corporate Governance Practices regarding internal controls have been amended to make specific references to the responsibility of the directors to conduct an annual review of the adequacy of staffing of the financial reporting functions and the oversight role of the audit committee.

June 2005

The Hong Kong Institute of Certified Public Accountants (HKICPA) published a guide on 29 June 2005, advising Hong Kong listed issuers on effective internal control and risk management practices. The guide aims to assist both main board and GEM issuers to implement effective internal control and risk management frameworks to meet the requirements of the Hong Kong Code on Corporate Governance Practices.

The guide should enable issuers to implement the required internal control practices throughout the accounting period, so that the directors are in a position to make a statement concerning the system of internal control in the annual report. The guide draws on the UK Turnbull Guide whilst taking into account the local Hong Kong market and business structures.

In contrast to other corporate governance reporting regimes, the Hong Kong Code is broader in coverage but less onerous in terms of required management action and attestation. This should translate into a Corporate Governance framework that empowers business to succeed, whilst not having a significant financial impact.

February 2005

The January 2005 issue of the ' Boardroom Update' focuses on the corporate governance requirements for Hong Kong listed companies.   
Hong Kong Exchange issues mandatory corporate governance provisions and regulatory reporting requirements under listing rules for Hong Kong main board and GEM listed companies. 
The Exchange has adopted a “comply or explain” approach to both Main Board and GEM Corporate Governance provisions.  However, where an issuer chooses not to comply with the relevant Code, the issuer must give considered reasons for any deviation, although such deviation may not necessarily constitute a breach of Exchange listing rules.  In addition, the Exchange requires Main Board and GEM listed companies to include a Corporate Governance Report (CGR) in both annual and half-yearly returns.  Subject to transitional arrangements for 2005, non-compliance with mandatory CGR disclosures will be viewed by the Exchange as a breach of listing rules. 

July 2002

The value of good corporate governance lies in its contribution to both the prosperity and accountability of business corporations.  Recognising the importance of Corporate Governance practices, the Hong Kong Insurance Industry issued guidance to its members, highlighting that the sound corporate governance of insurers is essential in ensuring the public has confidence in the industry and in promoting its long-term development.  An insurance industry with a high standard of corporate governance will also help enhance the status of Hong Kong as a regional financial centre.

Guidance Note 10 ("GN10") was subsequently issued by the Office of the Commissioner of Insurance, setting the minimum standard of corporate governance that is expected of authorized insurers as a basis for the evaluation and formulation of internal practices and procedures. 

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