HKICS launches State of Governance survey report on Hong Kong and Mainland companies
The corporate governance score card - while healthy - needs to improve towards genuine commitment
The leadership trio - Chairman, Board and CEO - assisted by the company secretary - as governance professionals - must 'set the tone on the top'
HONG KONG, Oct. 16, 2019 /PRNewswire/ -- A new survey report, Taking the Temperature - The state of corporate governance practices in Hong Kong and the Mainland, has found that governance score card of Hong Kong and the Mainland while healthy, still needs to move towards genuine commitment assisted by the company secretary as governance professional.
The survey of more than 400 Chartered Secretaries and Chartered Governance Professionals - as members of The Hong Kong Institute of Chartered Secretaries (HKICS) and working in a variety of companies listed and/or incorporated in the Mainland of China (the Mainland) and Hong Kong found that corporate governance regimes are set by the 'tone at the top'.
The survey identified that there are various influencers on a company's overall day-to-day corporate governance practice. Besides external influences like regulators, the top three 'most influential' internal figures in both Hong Kong and the Mainland are the Chairman (30%), the Board (27%) and the Chief Executive (22%).
The survey also found that, while more than one quarter (28%) of the replies talked of a 'wholehearted commitment' to corporate governance, excellence in corporate governance is still largely driven by compliance obligation - with 67% being motivated by 'general compliance'. Accordingly, when assessing an organisational commitment to corporate governance, there is room to move towards more genuine commitment with the assistance of the company secretary.
'Company secretaries are leading governance professionals who are best-placed and best-equipped to consult with senior leadership colleagues,' commented Mr David Fu FCIS FCS(PE), President of The Hong Kong Institute of Chartered Secretaries. He further indicated that 'company secretaries display their leadership daily in helping develop and deliver strong governance cultures.'
As to other findings, the survey found that:
- The company secretary (which includes the board secretary) - are regularly consulted on governance, including ensuring statutory compliance (78%), connected parties transactions (54%) and disclosable transactions (49%).
- Respondents in both markets perceived the top benefits of adopting sound corporate governance practices to relate to better risk management (75%), operational efficiencies (43%) and quality of financial controls (39%).
- In assessing their companies' strength in terms of best governance practices in a number of key areas, the majority in Hong Kong and the Mainland felt that their organisations were 'very strong' in adopting appropriate codes of conduct (23%), the implementation of financial controls (23%), anti-bribery and corruption measures (22%), and high ethical standards (18%). Only a negligible number (2% and below) rated their companies as 'weak' in these areas.
- However, there may be more work to be done for policies and procedures on matters relating to human, social and relationship management and interaction that are less easily recognised, defined or enforced. In both markets, only 10% respondents felt 'very strongly' that their company's policies and procedures are effective in diversity and inclusion, 15% in anti-sexual harassment and 12% in whistleblowing, when measured against best practice.
- An overwhelming majority of respondents (83%) judged their company's governance to be 'above average', 'favourably' or 'very favourably' compared with others listed or incorporated in the same market, and with those in Asia Pacific including India and Australia. When compared with companies incorporated in Britain, Europe or North America, 24% of the respondents ranked their company 'below average' or 'weak'.
- It is found that almost all (98%) respondents in Hong Kong and the Mainland expect an increase in corporate governance requirements, and 56% believe this increase will be 'substantial' or 'very substantial'.
Mr Fu further remarked, 'The temperature of corporate governance in our market is healthy, but together we have much work ahead in ensuring that this remains the case.'
To download the 'State of Governance' report, please click HERE.
About the Survey
Conducted between February and April 2019, the survey of members of The Hong Kong Institute of Chartered Secretaries represents an overview of current corporate governance practices and development. Of the 419 Institute members in Hong Kong and the Mainland responded, 48 of whom were from companies based in the Mainland.
The survey provides insights into the corporate governance practices of companies from a broad range of industries. Almost half of the companies involved in the survey were listed in Hong Kong, on the Main Board or GEM. The market capitalisation of these companies ranges from more than HK$50 billion to less than HK$2.5 billion, with workforces varying from less than 100 to more than 10,000 employees.
About The Hong Kong Institute of Chartered Secretaries
(Incorporated in Hong Kong with limited liability by guarantee)
The Hong Kong Institute of Chartered Secretaries (HKICS) is an independent professional body dedicated to the promotion of its members' role in the formulation and effective implementation of good governance policies as well as the development of the profession of Chartered Secretary and Chartered Governance Professional in Hong Kong and throughout the Mainland.
HKICS was first established in 1949 as an association of Hong Kong members of The Chartered Governance Institute (CGI), formerly known as the Institute of Chartered Secretaries and Administrators (ICSA) of London. It was a branch of CGI in 1990 before gaining local status in 1994 and has also been CGI's China/Hong Kong Division since 2005.
HKICS is a founder member of Corporate Secretaries International Association (CSIA) which was established in March 2010 in Geneva, Switzerland. In 2017, CSIA was relocated to Hong Kong in which it operates as a company limited by guarantee. CSIA aims to give a global voice for corporate secretaries and governance professionals.
HKICS has more than 6,000 members and 3,200 students.
For more information, please visit www.hkics.org.hk.
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