Corporate Governance in Hong Kong

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Corporate Governance in Hong Kong 1. Corporate Governance in Hong Kong Hong Kong’s position as an international economic and financial center is attributed to its exemplary corporate governance. With Hong Kong’s various authorities and regulatory bodies emphasizing on transparency and accountability for listed companies, Hong Kong was ranked first for corporate governance among 11 Asian countries in 2007. (Refer to Appendix 1) The Stock Exchange of Hong Kong (SEHK) describes corporate governance as the “duties, functions and power of the board of directors as a whole and executives and non-executive directors individually”. These binding responsibilities include the fulfillment of their legal obligations towards the…show more content…
Hong Kong complies with The Companies Ordinance (Cap 32), originally derived from the United Kingdom Companies Act 1948. This provides the basic regulatory infrastructure, addressing corporate governance issues for all companies. The Committee on the Financial Aspects of Corporate Governance was set up in May 1991 by the Financial Reporting Council and London Stock Exchange to address the financial aspects of corporate governance in the United Kingdom. It produced the Code of Best Practice in UK, which was adopted by SEHK in 1993. The Committee also came up with the Cadbury Report in 1992, which provided a basis for Hong Kong to adopt certain recommendations regarding the Board of Directors. For instance: A mixture of executive and non-executive directors on board; seeking of separate professional advice by independent directors; and regular board meetings. However, some recommendations of the Committee have not been adopted by Hong Kong. For instance, large companies in Hong Kong are not required to separate the roles of CEO and Chairman. This is hard to practise due to the family-dominated business characteristic. 4.2 Asian Influence As prevalent in East Asian countries, most listed companies in Hong Kong are family-controlled, resulting in minority shareholders being placed at a disadvantage. To protect the interests of minority shareholders, SEHK implemented the
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