The Institute promotes continuous learning as a fundamental aspect of professional development – do you welcome the introduction of mandatory director training for directors of listed companies, as proposed by Hong Kong Exchanges and Clearing Limited (HKEX) in its latest Corporate Governance Code (CG Code) consultation?

‘Definitely! Training empowers directors to effectively navigate the complexities of their roles amidst growing investor expectations. Continuous professional development (CPD) helps directors to refresh their knowledge and skills, and stay informed and responsive to changing landscapes.

On their appointment, directors must fully understand their roles, functions and responsibilities, and – crucially – their fiduciary duties and legal obligations towards the companies they serve.

They must also be conversant with corporate governance and, increasingly, with ESG-related issues. Additionally, they need to understand risk management and the functions of internal controls to ensure risk identification, assessment and mitigation.

They should receive updates on industry-specific developments, business trends and strategies relevant to the company they serve.

The above are all topics specified by HKEX for mandatory director training.

Also, the Chinese mainland, Singapore and Malaysia all have rules for mandatory director training, especially for first-time directors. Professionals such as lawyers, accountants and governance professionals who are members of the Institute all have mandatory CPD requirements (the Institute and The Law Society of Hong Kong, for example, both require a minimum of 15 hours annually).’

Do you think the proposed CG Code amendments are too prescriptive? For example, they set out a minimum number of hours of CPD training for first-time directors, as well as five ‘specified topics’ for such training.

‘Not really. I think HKEX is only setting out the basic knowledge and skills that require regular training. Directors can, and should, go further with the training that they believe would help them to perform their particular roles. For instance, if directors are on the audit committee, they would need to receive regular updates on accounting and finance matters.’

Do you think the five specified topics set out in the HKEX consultation paper are on target?

‘Yes. Plus I think the topics are sufficiently broad, especially the last one that states: “updates on industry-specific developments, business trends and strategies relevant to the issuer”.’

Do you agree with the definition of ‘first-time director’ in the consultation and do you think director experience from other jurisdictions should be considered relevant to determining who is a first-time director?

‘I do agree with the definition of “first-time director” in the consultation, but I think that there should be some flexibility for seasoned directors from established jurisdictions. I do however understand the potential difficulties in accrediting jurisdictions for this purpose.’

The Institute already plays a pivotal role in enhancing the capabilities of directors through its CPD training programmes – can you tell us about the director training courses the Institute is planning to launch in 2025?

‘The Institute has put together a Director Training Package, which covers the five topics specified by HKEX, with over 30 videos in English, 22 in Cantonese and 27 in Putonghua. We will continue to add to the collection in all three languages to ensure that it is a one-stop shop that meets the training requirements for new and existing directors.’

What topics will these training courses cover?

‘The Director Training Package covers the five topics specified by HKEX. We have selected a number of recommended core seminars and highlighted them in the Package.’

Is the Institute an HKEX-recognised training provider?

‘The Institute has a long tradition of providing quality training on corporate governance, ESG and many other topics relevant to the governance profession. Our Annual Corporate Regulatory Update was first introduced 25 years ago. Each year we provide over 80 conferences/seminars with over 18,000 participants, while our online ECPD Videos on Demand attracted over 8,000 participants in the last financial year. Regulators such as the Securities and Futures Commission and HKEX have recognised the Institute as a competent training provider in their publications.’

Does the Institute also intend to set up a professional platform (for knowledge sharing and collaboration) for directors in the same way it has done for sustainability professionals?

‘Good idea. Let me float this with colleagues and Council!’

Do you think the proposed CG Code amendments will lead to improved governance practices in Hong Kong and to a better alignment with international best practices?

‘As a governance institute, we are, in principle, supportive of HKEX’s proposals to enhance the governance of listed companies and reinforce Hong Kong’s position as a leading international finance centre. Mandatory director training is certainly an area that has our support and we are ready to help directors achieve their training goals.’