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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. April 2005 KPMG holds Corporate Governance breakfast briefing which was attended by over 160 CEO's, directors and senior management. The briefing was well received and addressed the main requirements of the new Hong Kong corporate governance listing rules. We were pleased to welcome Mr. Paul Chow as our keynote speaker on this very important subject. For more information on our April briefing please click here. February 2005 KPMG issues ' Boardroom Update'. Issue 1 focuses on the new corporate governance requirements for Hong Kong listed companies. For further information on complying with the new Hong Kong code, please contact Stephen Lee on 2826 7267 or Michael Lai on 2978 8943. January 2005 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. November 2004 The Exchange published its ‘Conclusions on Exposure of Draft Code on Corporate Governance Practices and Corporate Governance Report’ ("Exposure Conclusions Report") which summarised the main comments received in response to the January 2005 Exposure Paper and which sets out it’s final conclusions. Seventeen responses were received during the exposure period. January 2004 The Exchange published an Exposure paper on Corporate Governance Practices and Corporate Governance Report (“Exposure Paper”) The primary objective of the exposure paper was to seek market views on the timing of the proposed implementation of the Code on Corporate Governance Practices and to allow the market the opportunity to comment on the detailed wording of the code to ensure there were no ambiguities and to ensure the Code requirements would be clear and concise. June 2003 Founded in 1984, the Standing Committee on Company Law Reform (SCCLR) was formed to advise the Financial Secretary on amendments to the Companies Ordinance to ensure that Hong Kong’s company law continues to meet the needs of the business community. Members of the SCCLR include lawyers, accountants, company secretaries, businessmen, academics and representatives of government departments. The SCCLR issued its Corporate Governance Review Phase II consultation paper on 11 June 2003, proposing changes to enhance corporate governance practices in Hong Kong. The proposals relate to different aspects of directorship (including directors’ roles, duties, qualifications, training and remuneration, as well as connected transactions, board procedures and board committees etc.); shareholders’ rights and conflicts of interests; corporate reporting with focus mainly on external auditors and corporate regulation. In January 2004, the SCCLR issued its final recommendations arising from the phase II corporate Governance review. 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. Corporate Governance in China Recognizing the importance of corporate governance in the continuous development of the Chinese capital markets, almost immediately following its announcement of the “Guiding Opinion for Listed Companies on the Establishment of an Independent Non-Executive Directors System”, the China Securities Regulatory Commission (“CSRC”) issued a consultation paper and the corresponding final version of “Guideline on the Management of Listed Companies” on 11 September 2001 and 7 January 2002 respectively. For further information, please visit www.csrc.gov.cn. 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.
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