Hong Kong Exchange Beefs Up Corporate Governance Rules
July 10, 2025
The Stock Exchange of Hong Kong (“HKSE”) has announced significant Listing Rules and corresponding Corporate Governance Code amendments effective 1 July 2025.1
1. Why is this being done now?
The amendments have been carefully implemented following a review of comparable markets and a consultation paper issued twelve months ago.2
2. What are the amendments trying to achieve?
The goal is to strengthen corporate governance practices of Hong Kong listed companies through improved efficacy and independence of the board; enhanced risk management and internal controls; better emphasis on board and workplace diversity; and improved capital management, notably in relation to dividend policies and disclosures.
3. What are key takeaways from the amendments?
A stand out development is that listed companies with non-INED chairmen are now being encouraged to appoint a lead INED.3
A particular concern here is for family-controlled companies where the board can be seen as a “closed shop”.
The lead INED would act as a bridge between investors and management and, importantly, no increased liability is imposed on the lead INED,4 so hopefully this will be a win-win development for all concerned.
4. What amendments should those contemplating a ListCo directorship be aware of?
The amendments significantly enhance existing training requirements for ListCo directors.5 INEDs are also now limited to tenures of nine years.6
Further, in the course of the review, HKSE noted that more than twenty INEDs held seven or more directorships on ListCo boards in Hong Kong. HKSE were particularly concerned that insufficient time was being spent by “multi-tasking” directors to properly discharge their duties.
As a consequence, new applicants must have directors with no more than six ListCo directorships, and this limit will also apply to existing ListCos by the end of a three-year transition period.7
5. What are the other major amendments?
Other significant areas of amendment are:
- Board disclosure of its own diversity policy on an annual basis as well as publishing its proposals to promote inclusion and diversity across the workforce;8
- Annual reviews of risk management and internal controls;9
- Biannual Board Performance reviews;10
- Boards to explain dividend policy and variation in rights. If no dividends are declared, the Board has to explain why.11
6. Are these new rules and guidelines really necessary or are they just window dressing?
The breadth of the amendments and the significantly increased disclosure requirements do represent a serious effort by HKSE to maintain its reputation as a leading international capital market with corresponding global corporate governance standards. With this aim in mind, the amendments should be welcomed by investors in providing both enhanced transparency and confidence in the Hong Kong markets.
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Chris Lambert
For more information or advice on listing compliance or related matters in Hong Kong, please contact:-
Chris Lambert | clambert@robertsonshk.com | +852 2861 8417
Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.
1 The HKSE published the consultation conclusions on its review of the Corporate Governance Code and related Listing Rules in December 2024, with the relevant Corporate Governance Code enhancements taking effect from 1 July 2025. The “Corporate Governance Guide for Boards and Directors” was published in May 2025.
2 The HKSE published on 14 June 2024 a consultation paper outlining proposed enhancements to the Corporate Governance Code and related Listing Rules.
3 Recommended Best Practice C.1.8 of the Corporate Governance Code.
4 Chapter 1 paragraph 43 of the Corporate Governance Guide for Boards and Directors.
5 Chapter 2 of the Corporate Governance Guide for Boards and Directors.
6 Chapter 1 paragraph 22 of the Corporate Governance Guide for Boards and Directors; MB Rule 3.13A / GEM Rule 5.09A.
7 Chapter 1 paragraph 31 of the Corporate Governance Guide for Boards and Directors; MB Rule 3.12A / GEM Rule 5.07A.
8 Chapter 3 of the Corporate Governance Guide for Boards and Directors; MB Rule 13.92(1) / GEM Rule 17.104(1) and MDR paragraph J.
9 Chapter 4 of the Corporate Governance Guide for Boards and Directors; MDR paragraph H.
10 CP B.1.4.
11 MDR paragraph M.
