2023 Hong Kong Proxy Season Review

Below are key takeaways from ISS’ recently released 2023 Proxy Season Review – Hong Kong. The full report is available to institutional subscribers by logging into ProxyExchange then selecting the Governance Exchange and its Report Center tab and to corporate subscribers by logging into Governance Analytics then selecting the Governance Exchange and the Report Center tab.

• Board Independence: Effective Jan. 1, 2023, companies with all their independent directors serving for more than nine years are required to elect a new independent director as part of the board. An explanatory statement should also be included in the notice of the AGM or the relevant meeting circular specifying the length of tenure of each existing INED on a named basis. ISS Research identified 37 percent of the total companies covered have long-serving INEDs.
• New Regulatory Framework for Overseas Listing of Mainland Issuers: The Stock Exchange of Hong Kong Limited (SEHK) published conclusions to its consultation paper on listing rule amendments following Mainland China regulation updates and other proposed rule amendments relating to Mainland issuers. The consequential rule amendments include the removal of separate class meeting requirements for the issuance and repurchase of shares by Mainland issuers and related provisions.
• ESG Disclosure Enhancements: The SEHK proposes to mandate all issuers to make climate-related disclosures in their ESG reports (i.e. upgrade from current “comply or explain”) as well as introduce new climate-related disclosures aligned with the International Sustainability Standards Board Climate Standard. Included in the summary of the new climate-related disclosure requirements are the recommended publications regarding governance, strategy, risk-management, and metrics and targets. 

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