Heightened expectations and liabilities for directors and senior executives working for companies in Hong Kong and Mainland China was the focus of the Institute’s latest Company Secretary/Board Secretary Roundtable meeting.

The Institute holds five Company Secretary/Board Secretary Roundtable meetings every year in Hong Kong and cities in Mainland China. These forums are designed to assist Institute members and Affiliated Persons from both the Mainland and Hong Kong to keep up to date with the fast-changing regulatory environment in which they work. The latest Roundtable, held on 18 January in Hong Kong, focused on the theme ‘The Board Secretary Practices under the Tightened Regulations on Directors and Senior Management’.

Institute President David Fu FCIS FCS(PE) gave the welcoming address, reiterating the Institute’s commitment to the continuous promotion of best corporate governance practices and training of professional company secretaries as both the quantity and quality of listed companies, particularly those from the Mainland, continue to rise. He was followed to the podium by two distinguished speakers who shared their insights and experience with board secretaries representing various Mainland companies listed in China and/or Hong Kong SAR.

The first speaker, Poon Chiu-kwok FCIS FCS(PE), Executive Director, Vice-President and Company Secretary of Huabao International Holdings Ltd, who is also a member of the Institute’s Professional Development Committee, talked about the latest rules and regulations regarding directors’ and senior executives’ liabilities, as well as the tougher approach to listed company misfeasance taken by regulators in Hong Kong.

His presentation was followed by that of Zhu Xu, Board Secretary at China Vanke Co Ltd, who shared with the audience her recommendations on how to ensure directors perform their duties to the best of their abilities and in compliance with applicable rules and regulations. She also discussed the benefits and challenges of Vanke’s decentralised ownership structure.

Listing regime reform in Hong Kong

In 2015, Hong Kong turned down a proposed bid by e-commerce giant Alibaba to list in Hong Kong with a voting structure for board nominations that would have violated the one-share-one-vote principle. Alibaba eventually opted to list in New York, depriving, Mr Poon pointed out in his Roundtable presentation, Hong Kong investors of an opportunity to buy into the company.

‘The dual-class structure, whether it’s for better or worse, proposed by Alibaba and increasingly other “new economy” firms has been an ongoing debate. But that has become a catalyst for review and change, which is now driving a change in Hong Kong’s listing regulatory regime,’ he said.

After months of debate and an industry-wide consultation, Hong Kong Exchanges and Clearing Ltd (HKEX) and its subsidiary The Stock Exchange of Hong Kong Ltd proposes to add two new chapters to the Main Board Listing Rules to allow the listing of:

  1. biotech issuers that are pre-profit and/or pre-revenue, and
  2. issuers from emerging and innovative sectors that have weighted voting rights (WVR) structures, subject to additional disclosure and safeguards.

Companies with WVR structures would be required to have a minimum expected market capitalisation of HK$10 billion and, if below $40 billion of market capitalisation, would need to meet a higher revenue test of $1 billion in the full financial year before listing. Pre-revenue companies listing under the new biotech chapter would be required to have a minimum expected market capitalisation of $1.5 billion.

Front-loaded regulation in Hong Kong

Another major development discussed by Mr Poon was the adoption of a ‘front-loaded’ regulatory strategy by the Securities and Futures Commission (SFC). This will, among other things, impose more direct liabilities on directors and senior management, Mr Poon explained.

According to the May 2017 issue of SFC’s newsletter Enforcement Reporter, the market watchdog said there have been disturbing cases involving corporate fraud, misleading financial statements, serious conflict of interest and failure to disclose inside information. To combat this trend, the SFC has been conducting a large number of investigations into such cases – many of them involving serious allegations and dereliction of duty on the part of directors and senior executives.

The SFC’s investigations have highlighted the need to address the following issues:

  • outright fraud by powerful directors or senior executives who are usually company controllers
  • company controllers putting their own interests before those of the company and its minority shareholders, without understanding that the company is an independent entity with its own interests
  • other directors or senior executives deferring to a dominant company controller by relinquishing their responsibilities or accepting compromised roles that prevent them from properly discharging their own duties
  • non-executive directors (NEDs) not acting as a check and balance on executive directors and failing to be sceptical and diligent in discharging their duties and to thoroughly question whether proposals are commercially sound and in the interests of all shareholders, and
  • boards and senior executives not having proper controls that ensure the board is aware of inside information and to disclose it appropriately as soon as reasonably practicable.

Mr Poon warned that the SFC’s new approach will strengthen regulatory oversight of board governance, and will inevitably increase the risks faced by directors and senior executives in performing their duties.

The SFC recommends that directors and senior executives not only ensure profits but also care for minorities; and that they should be inquisitive, professional and diligent, and while bearing in mind the basic rules and the key nature of directors and duties.

It further suggests directors act in good faith and in the best interests of the company and its shareholders as a whole; exercise due and reasonable care, skill and diligence; exercise independent judgement; exercise their powers for proper purposes and avoid actual or potential conflicts of interest; and refrain from making undisclosed profits.

For independent non-executive directors, the SFC recommends that they supervise management and protect shareholder interests; express disagreement; and wherever they choose to resign, they should provide substantial reasons.

Citing various regulations under the Securities and Futures Ordinance (SFO), in particular Sections 213, 214, 258, 307N, and 390, Mr Poon said the SFC holds the senior management of a listed company accountable under its regulatory powers.

‘So beware, whenever the SFC’s enforcement department approaches you, it means that an investigation file has been opened against your company, directors or senior management. Be co-operative. Honesty is the best policy,’ he reminded the Roundtable audience.

He further citied four recent cases as a testimony of the SFC’s authority and commitment to bringing fraudsters to justice. In 2015, the SFC won a landmark battle to force the Hong Kong–listed China Metal Recycling Holdings Ltd into provisional liquidation, alleging evidence of accounting fraud.

In 2016, the Market Misconduct Tribunal found that the former Chairman and Chief Executive Officer of Greencool Technology Holdings Ltd, Gu Chujun, and four former senior executives (including its former financial controller) disclosed false or misleading information inducing transactions, and so engaged in market misconduct.

Last year, the SFC successfully disqualified the former chairman and four directors of Hanergy Thin Film Power Group to act as directors for up to 15 years through a court order under Section 214 of the SFO.

The Hanergy case shed light on the use of shelf companies by Hong Kong small-caps and the conflicts of interest between Hong Kong–listed businesses and the Mainland parent companies that channel financing from the Hong Kong market without proper disclosure.

Similarly, the SFC commenced legal proceedings under Section 214 of the SFO to disqualify 10 former executives and NEDs of Freeman FinTech Corporation Ltd on the grounds that they failed to act in good faith and in the best interests of Freeman in the purchase and sale of a stake in Liu’s Holdings Ltd.

Towards the end of his presentation, Mr Poon made mention of the recent guidance issued by the SFC on directors’ duties and a circular to financial advisers regarding valuations in corporate transactions, together with a statement on the liability of valuers for disclosure of false or misleading information.

The regulator also noted that front-loaded regulation would be used to tackle problematic Growth Enterprise Market initial public offerings, which many commentaries have acknowledged were becoming dysfunctional and were harming Hong Kong’s reputation. Ashley Alder JP, the SFC’s CEO, said the SFC was able to tackle the problem by joining the corporate finance and enforcement teams together to coordinate a plan of action.

The pros and cons of having a diversified shareholding

Ms Zhu, Board Secretary for China Vanke, began her presentation with a brief review of the history of Vanke, which commenced in 1984 as a small, diversified business entity. It switched to real estate development in 1993 and focused on real estate as its core during 2001–2012. In 2012, the conglomerate bought a 74% stake in the Hong Kong–listed Winsor Properties, now renamed as Vanke Property (Overseas), and since then has positioned itself as an integrated developer and community builder with a diversified real estate portfolio in China, Hong Kong and abroad.

‘Vanke has long had a decentralised ownership structure. Real estate development is a capital-intensive business activity. With a well-diversified shareholding structure, and without a single dominant shareholder, it takes effort and time to get the consensus of the majority of shareholders on major decisions, such as financing, connected transactions and class voting,’ she said.

The board makes decisions on a broad range of important issues, such as profit-sharing schemes, project shareholding, financing and conversion of B-shares to H-shares. In 2001, Vanke introduced independent directorships and, since 2002, its board has reshuffled every three years. In each term, the number of internal directors cannot exceed one-third of the board. The number of independent directors should consist of more than one-third of the board. At least one independent director should be an accounting professional, Ms Zhu said.

How to get the best out of your directors

Ms Zhu cited four ways to ensure directors perform their duties to their best abilities and in compliance with applicable rules and regulations.

‘As a start, it is important for us to identify and recruit well-qualified, experienced independent directors, especially those recognised as having integrity and credibility. Over the years we have had a number of prominent independent directors on our board, such as Charles Li, Chief Executive, HKEX; Zhang Liping, Senior Managing Director and Chairman, Greater China, Blackstone; and The Honourable Paul Chan Mo-po GBM GBS MH JP FCIS FCS, HKSAR Financial Secretary.’

Equally important is a structured training programme for all incoming and existing independent directors, right from induction to internal training, site visits and external training. She added that email alerts regarding such issues as trading windows and policy changes, classified by importance and urgency, would be sent to all directors.

‘On very special occasions that demand their immediate attention, such as announcing trading suspension the very next morning, email alerts are marked as being of the utmost urgency. Not only that, as the board secretary, I also have to make sure they read the notice, by text or call or whatever, beforehand, no matter when or where they are, as all board directors have to sign in the name of the company in a collective manner,’ she noted.

Ms Zhu also said sufficient communications with directors and distributing detailed documents to them all prior to meetings is also effective in enabling them to make informed decisions regarding the matters to be discussed in the meetings.

Two examples she cited included the internal review of the company’s 2016 financial report by the audit committee prior to disclosure, and the discussion of the introduction of a performance benchmarking system based on the economic value added system recommended for state-owned enterprises by the State-owned Assets Supervision and Administration Commission in 2010.
An additional measure Vanke implements to ensure the effectiveness of the independent directors’ governance role is purchasing an independent directors’ liability insurance policy for each of them as a liability safety net.

‘We feel proud to say that neither the company’s directors nor senior executives have been accused of major violation of laws, administrative regulations and compliance rules, in both the Mainland and Hong Kong, over the years, thanks to an effective exercise of corporate governance. Independent directors have also spoken out for minority shareholders as many as seven times.’

The Q&A discussion

During the open discussion session after the presentations, Dr Gao Wei FCIS FCS(PE), Institute Vice-President, applauded Vanke’s use of a notification system, classified by importance and urgency, that allows the board secretary to send out text, email or phone alerts to directors, suggesting that this could also be considered by other companies.

Audience members also exchanged their views on the recruitment and selection of qualified and truly independent directors through the nominating committee, as well as practical ways to avoid perceived or potential conflicts of interest, especially if a candidate is a good friend of the company’s chairman.

Jimmy Chow

The Institute’s Company Secretary/Board Secretary Roundtable meeting was held at the Admiralty Conference Centre, Hong Kong, on 18 January 2018.





公會會長傅溢鴻FCIS FCS(PE)在致歡迎辭時表示,隨著香港上市公司數目繼續增長,特別是有更多內地企業來港上市,公會將繼續致力於在內地和香港推動最佳企業管治實務,繼續為董秘提供專業培訓。隨後,兩位演講嘉賓先後分享了最新的法規和監管發展情況,以及他們出任董秘的實務經驗。

第一位演講嘉賓是華寶國際控股有限公司執行董事、副總裁兼公司秘書潘昭國FCIS FCS(PE),他也是公會專業發展委員會成員之一。他講解了針對董事和高級管理人員責任的最新法規,特別是香港監管機構對上市公司的違規行為所採取的強硬態度。












  • 勢力強大的董事或高層人員(通常是公司的控制人)公然欺詐:
  • 公司控制人以他們個人而非公司及其少數股東的利益為先,不明白公司是一個有其本身利益的獨立實體;
  • 其他董事或高層人員為了順從具主導地位的公司控制人的意願,放棄履行本身的職務,或接受妥協,扮演有礙他們恰當地履行責任的角色;
  • 非執行董事未有發揮對執行董事的制衡作用,在履行職責時警覺性及勤勉不足,以及沒有徹底查問各項建議在商業上,是否穩健和是否符合所有股東的利益;以及
  • 董事局及高層人員沒有制訂適當的監控措施,以確保董事局知悉內幕消息及在合理地切實可行的範圍內盡快而適當地作出披露。



  • 真誠地以公司及其股東的整體最佳利益而行事
  • 以適當及合理水平的謹慎、技能及勤勉行事
  • 作出獨立的判斷
  • 為恰當目的而行使權力
  • 避免實際或潛在利益衝突
  • 嚴禁賺取未經披露的利潤









證監也提到,將特別利用前置監管以更有效糾正創業板IPO的一些亂象,免得損害香港聲譽。證監會行政總裁歐達禮((Ashley Alder JP))補充說,前置式監管的意義在於有問題就前期處理,並會協調企業財務和執法團隊共同行動。


2012年,該集團收購了香港上市的Winsor Properties Holdings Ltd(現更名萬科置業(海外)有限公司)74%的股份。自此之後,萬科晉身成為一家擁有多元化房地產業務的綜合型發展商,除中國內地外,在香港及海外建造和經營不同的房地產項目。





“我們先要確保有一套嚴謹的董事遴選和招聘制度。獨董最好由有經驗、有信譽的專業人士出任,尤其是那些被行業認為具高度誠信的人士。多年來,董事會曾邀得多位傑出獨董出任,包括現任香港交易所行政總裁李小加、黑石集團現任高級董事總經理兼大中華區董事長張立平、現任香港特區財政司司長陳茂波GBM GBS MH JP FCIS FCS。”





在演講結束後的討論環節,公會副會長兼圓桌會議主席高偉博士FCIS FCS(PE),高度讚揚萬科按照議案重要性和緊迫性的通報系統,在緊急情況下,以手機信息、致電等各種形式讓各董事知悉事件,建議其他公司董秘參考這個做法。


Jimmy Chow