Govt to further strengthen corporate governance
Updated: 2010-10-23 06:53
By Joy Li(HK Edition)
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April Chan, president of the Hong Kong Institute of Chartered Secretaries. Provided to China Daily |
Legislation to further strengthen corporate governance in Hong Kong may be introduced before the end of this year, said Secretary for Financial Services and the Treasury KC Chan.
Speaking Friday at the Seventh Biennial Corporate Governance Conference held in the city, Chan said that rewriting the Companies Ordinance is at the core of corporate governance reforms in Hong Kong.
Starting from the middle of 2006, the rewriting process has gone through three consultations in 2007 and 2008. A draft Companies Bill for further public consultation ended in early August this year. Chan said the bill may be set before the Legislative Council for scrutiny before the end of 2010.
The financial services secretary added that the 2008 financial crisis prompted investors to place a far greater emphasis on corporate governance.
"Honest, straightforward and timely corporate reporting of both financial and - increasingly importantly - non-financial aspects of a company's operations are sought by all stakeholders. Such 'integrated reporting' will continue to increase in importance during the next 10 years," said April Chan, president of Hong Kong Institute of Chartered Secretaries, the organizer of the conference.
Andrew Fung, general manager and head of treasury and investment at Hang Seng Bank Limited, also pointed out that corporate governance is of great importance for the Hong Kong stock market.
Family companies have traditionally dominated the local stock market, many of which are large-cap and index components, Fung said. As these family-controlled companies face succession problems, corporate governance becomes all the more vital as investors hope to see sustainability, he added.
Meanwhile, the local bourse has seen more and more mainland companies list in the city since 2003. However, Fung expressed concern that many of these mainland companies are state-owned or run by former government officials, and may find it difficult to adjust their corporate governance standards.
As an asset manager and investment specialist, however, Fung observed that Hong Kong companies are devoting more efforts on facilitating investor relationships, which is "an encouraging trend."
However, building a good reputation for corporate governance is no easy task. Recently, investors received shocks from events that displayed poor corporate governance. Shares of Zijin Mining Group, a Hong Kong-listed mainland gold miner, tumbled in July after the company failed to disclose timely information on the toxic-waste spill at its copper plant in Fujian province. The company, which is also listed in Shanghai, was investigated by the China Securities and Regulatory Commission for "misconduct in information disclosure".
In another recent case, Hong Kong's Securities and Futures Commission ordered Hontex International, a mainland-based fabric maker, to halt the trading of its shares in March this year after the company was caught providing misleading information in its IPO prospectus.
China Daily
(HK Edition 10/23/2010 page3)