Themis Qi
Hong Kong Exchanges and Clearing (0388) maintained its limitations on independent non-executive directors as it proposed, effective from July next year.
However, the bourse operator will prolong the transition period from three to six years and implement the new rules in two phases.
In June, HKEX released a consultation paper about corporate governance code enhancements in one more attempt to address the long-debated "overboarding" and "long-serving" issue.
The bourse proposed an INED to serve no longer than nine years in one public company and hold directorship in no more than six listed issuers concurrently. The proposed rules were adopted by the bourse, according to conclusions released yesterday.
HKEX received 261 responses about the consultation paper, with support for all proposals from "a majority of respondents." But 120 respondents, or 49 percent, disagreed with the bourse's definition that an INED serving for nine years or more will be no longer considered independent.
HKEX head of listing Katherine Ng Kit-shuen said the measures aim to meet investors' demand more closely and promote good corporate governance practices among Hong Kong-listed companies.
Ng also emphasized that HKEX has "balanced" the needs of various stakeholders, adding that rules in other markets are more strict.
The limitation on INEDs has been controversial ever since the consultation, with businessmen arguing the term has nothing to do with the director's actual independence.
Great Eagle (0041) chairman Lo Ka-shui was rumored to have met Chief Executive John Lee Ka-chiu in November to express associated concerns.
In the conclusion paper, HKEX said it will provide six years instead of three for transition. But the period for long-serving INEDs stayed unchanged at three years, which means relevant companies must exclude those directors by the first annual general meeting held on or after July 1, 2028.
In addition, the public companies must exclude all long-serving INEDs from their boards on or after July 2031.
