To improve the standard of corporate governance among listed companies in Hong Kong, Hong Kong Exchanges and Clearing Limited published its consultation conclusions on risk management and internal controls, and subsequently issued amendments to the Corporate Governance Code and Corporate Governance Report (the Code) (Appendix 14 to the Hong Kong Main Board Listing Rules) on 19 December 2014. The revised Code becomes effective for accounting periods beginning on or after 1 January 2016.
To evaluate the extent of readiness with respect to complying the revised Code, we have conducted a comprehensive analysis of CG reports of 230 listed companies in Hong Kong.
This report provides directors, executives and managers a comprehensive analysis on how ready listed companies are responding. The analysis is also diverse - we have included companies from the broader Hang Seng Index, the Hang Seng China Enterprise Index, as well as across four industries (i.e. financial services, real estate, retail and technology). It provides a starting baseline of listed company adoption practices in the key areas of risk management and internal controls. The study allows companies to think more deeply and creatively about compliance with the Corporate Governance Code as a value-adding activity.
At the end of the day, 'Cracking the Code' is not a one-off effort. However, once a company has established robust systems and proper processes to deal with changing regulations, many find that being ahead of the curve affords them advantages that increases their competitiveness and improves relations with investors.