Hong Kong companies say HKEX is ‘micromanaging’ in its fix for overboarding, governance

Name: SCMP
Telephone: +852-2680-8888

Adding a hard cap on the number of directorships one can take does not improve their work, said the Chamber of Hong Kong Listed Companies

Reading Time:2 minutes

Why you can trust SCMP

Attendees of the Saudi Tadawul Group’s inaugural international edition of the Capital Market Forum at the Connect Hall of the Hong Kong stock exchange (HKEX) in Central on 9 May 2024. Photo: Edmond So.

Enoch Yiu

Published: 8:30am, 25 Jul 2024

Hong Kong’s publicly traded companies have come out to “strongly oppose” the plan by the city’s stock exchange to cap the number of board seats each independent director can take, and limit the duration of their tenure.

“A hard cap on the number of directorships does not [ensure] better [performance],” said Mike Wong Ming-wai, chief executive of the Chamber of Hong Kong Listed Companies, whose members include Sun Hung Kai Properties, Henderson Land and most of the largest companies on the Hong Kong exchange.

“A director may take on many directorships but can still contribute sufficient time and effort to serve,” Wong said in an interview with the Post. “It boils down to the integrity and discipline of the individuals. Directors are well aware of their duties and the consequences of failing them.”

Wong’s comments represent the strongest pushback by one of the city’s most powerful lobby groups against Hong Kong Exchanges and Clearing Limited (HKEX) as it collects public feedback until August 16 on its proposal to improve corporate governance. HKEX wants to set the maximum of board seats for independent non-executive directors (INEDs) at six, each for up to nine years, effective January 2025, with a three-year sunset period to rectify the “overboarding” problems.

Mike Wong Ming-wai, chief executive of the Chamber of Hong Kong Listed Companies, on 23 January 2007. Photo: Jonathan Wong.

Two dozen corporate figures sit as INEDs on 181 companies in Hong Kong, each serving over the proposed six-board limit. The city’s five busiest INEDs each sit on 10 boards, or more, according to the HKEX. As many as 1,500 INEDs have served as directors in 810 companies for longer than nine years, the data showed.

Hong Kong has lagged behind other stock exchanges in tackling its “overboarding” problem. In Beijing, Shanghai and Shenzhen, concurrent INED positions are capped at three. The London bourse limits full-time executive directors to one board seat in a FTSE 100 company.