2024 Hong Kong Proxy Season Preview

Below are key takeaways from ISS’ recently released 2024 Hong Kong Proxy Season Preview. The full report is available to institutional subscribers by logging into ProxyExchange then selecting the Governance Exchange and its Report Center tab and to corporate subscribers by logging into Governance Analytics then selecting the Governance Exchange and the Report Center tab.

• Hong Kong Equities Market: Total equity funds raised in Hong Kong dropped by more than 40 percent from its 2022 level to HKD 151 billion in 2023. The total equity funds raised of HKD 151 billion is considered as the lowest for Hong Kong in more than a decade. Commentators on the issue expect the Hong Kong equity market to improve in the second half of 2024, although recovery is anticipated to be gradual rather than instantaneous.
• ISS Policy Change: The ISS Benchmark Policy was amended to align with the provisions of the Hong Kong Corporate Governance Code regarding long-serving independent non-executive directors (INEDs). Under the Hong Kong Corporate Governance Code, if all INEDs have served for more than nine years: (i) additional disclosure will be required from the company; and (ii) the company will have to appoint/elect a new independent non-executive director to comply with the applicable code provisions.
• Board Diversity: 2024 marks the culmination of the transition period aimed at ending the presence of single-gender boards in Hong Kong-listed companies. The Hong Kong Listing Rules provide that diversity will not be considered to be achieved for a single gender board. Companies continuing to maintain a single gender board will have up to Dec. 31, 2024 to appoint a director of a different gender.
• ESG-Related Regulatory Update: The Hong Kong ESG Guide will be amended to make climate-related disclosures in ESG reports mandatory for all listed companies. This is an upgrade to the current “comply or explain” requirement for climate-related disclosures. This changes is intended to align Hong Kong’s climate-related disclosure standards with the ISSB Climate Standard.

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