/ 2 min read / Reed Smith In-depth

Latest Review of the Corporate Governance Code and Related Listing Rules by HKEx

Authors

Cynthia Wei, KC Mok, Shirley Lin, Andrea Zhou

Key takeaways

  • HKEx prescribes enhanced corporate governance standards and disclosure requirements with effect from 1 July 2025.
  • Highlight of the new rules:
    • require mandatory directors training. First-time directors need to complete 24 hours of training within 18 months of the date of their appointment.
    • impose a 9-year term limit for independent non-executive directors, to be implemented by phases within the 6-year transition period.
    • phase out overboarding independent non-executive directors by the first AGM held on or after 1 July 2028.
    • require issuers to appoint at least one director of a different gender on the nomination committee.

Introduction

In June 2024, The Stock Exchange of Hong Kong Limited (“HKEx”) published a consultation paper seeking views and comments from the public on its proposed changes to the Corporate Governance Code under the HKEx’s Listing Rules. The proposed changes touch upon various aspects of corporate governance concerning existing issuers and IPO applicants, requiring higher standards and enhanced disclosure on areas ranging from board effectiveness to independence of independent non-executive directors (“INEDs”), diversity, risk management and internal controls and dividends policy.

After receiving extensive market feedback, HKEx published its consultation conclusions in December 2024 (the “Consultation Conclusions”), adopting all of its proposals with certain modifications. The changes to the Corporate Governance Code and related amendments to the Listing Rules will come into effect on 1 July 2025 (while the implementation of certain proposals will be carried out in phases), applying to the Corporate Governance Reports (the “CG Report(s)”) and annual reports for financial years commencing on or after 1 July 2025.

Key changes

The following table provides a summary of the key changes which will affect issuers’ day-to-day corporate governance compliance and preparation of their CG Reports and annual reports. Issuers are particularly reminded to take note of the implementation dates of the relevant proposals.

Summary of the key changes which will affect issuers’ day-to-day corporate governance compliance and preparation of their CG Reports and annual reports.

There are also certain minor amendments to the HKEx Listing rules that will be in effect from 1 July 2025, covering areas including:

  • Codification of the requirement on setting a record date.21
  • Codification of disclosure in the annual report of issuers’ modified auditors’ opinions.22
  • Clarification of HKEx’s expectation on the provision of monthly updates to the board. The information provided should (where available) include monthly management accounts and management updates. Where directors consider that they have not been provided with sufficient information by management, they should be able to request further information.23
  • Alignment of the requirements for the nomination committee, audit committee and remuneration committee on establishing written terms of reference and the arrangements during temporary deviations from requirements.24

Further Guidance by HKEx

In its Consultation Conclusions, HKEx promises that, in the first half of 2025, HKEx will add to its Corporate Governance Practices portal a new guidance (the “Further Guidance”) for boards and directors to assist issuers’ compliance with the new Corporate Governance requirements and address the public’s requests for guidance by providing further guidance on the required disclosure of specific topics in the CG Reports and annual reports. HKEx has not yet published the Further Guidance as of the date of this Update. We will provide updates once the Further Guidance is available.

In-depth 2025-061

  1. New code provision C.1.8 under the Corporate Governance Code
  2. Paragraph 38 of the Consultation Conclusions
  3. New code provision F.1.1
  4. New paragraph L. (d) of the Mandatory Disclosure Requirements under the Corporate Governance Code (“MDR”)
  5. New code provision F.1.1
  6. New paragraph B. (i) of the MDR
  7. New Code provision C.1.1
  8. Paragraph 82 of the Consultation Conclusions
  9. Paragraph 90 of the Consultation Conclusions
  10. Paragraph 102 of the Consultation Conclusions
  11. New paragraph E.(d).(iii) of the MDR
  12. Paragraph 112 of the Consultation Conclusions
  13. New Note 3 to Main Board Rule 3.13A and New Note 3 to GEM Rule 5.09A
  14. Paragraph 131 of the Consultation Conclusions
  15. New paragraph B.(a) of the MDR
  16. New paragraph J. (b) of the MDR
  17. New paragraph J. (c) of the MDR
  18. New paragraph H. of the MDR
  19. Paragraph 188 of the Consultation Conclusion
  20. New paragraph M. of the MDR
  21. New Main Board Rule 13.66(1) and GEM Rule 17.78(1)
  22. Paragraph 3.1 of Appendix D2 to the Main Board Listing Rules and Note to GEM Rule 18.47
  23. New code provision D.1.2
  24. New Main Board Rules 3.23, 3.27, 3.27B and 3.27C and GEM Rules 5.33, 5.36, 5.36B and 5.36C (for all issuers except for issuers with a weighted voting rights structure), and new Main Board Rule 8A.28A (for issuers with a weighted voting rights structure). The requirements for the nomination committee, the audit committee and the remuneration committee do not apply to secondary listed overseas issuers.

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