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1
Consultation onProposed Amendments to the
Listing RulesRelating to CorporateGovernance
Issues
2
Objectives

• To strengthen the corporate governance of
  companies listed on the Main Board and GEM
• To ensure that the governance and accountability
  of issuers in Hong Kong are in line with the best
  international practices

3
Key Principles

• Same voting rights
• Checks and balances
• Accountability and responsibility
• Timely disclosure and transparency

4
Consultation Focuses

• Part B --- Protection of Shareholders Rights
• Part C --- Directors and Board Practices
• Part D --- Corporate Reporting and
  Disclosure of Information

5
Protection of Shareholders Rights
6
Protection of Shareholders Rights

• Voting by Shareholders
• Dilution of Shareholders Interests
• Notifiable Transactions other than Connected
  Transactions
• Connected Transactions

7
Protection of Shareholders Rights
Voting by Shareholders

• Voting by poll

Dilution of Shareholders Interests

• Placing of shares using the general mandate
• Placing and top-up subscription

8
Protection of Shareholders Rights
Notifiable Transactions other than Connected
Transactions

• Very substantial acquisitions and reverse
  takeovers
• Introduction of very substantial disposals
• Introduction of total assets test and turnover
  test
• New thresholds for notifiable transactions
• Asset valuation

9
Protection of Shareholders Rights
Connected Transactions

• Definition of connected person
• Transaction between connected persons and
  associated companies
• Continuing connected transactions
• Meaning of subsidiary

10
Directors and Board Practices
11
Directors and Board Practices

• Independent Non-executive Directors
• Board Practices
• Directors Duties and Responsibilities
• Securities Transactions by Directors
• Directors Contracts, Remuneration and
  Appointments

12
Directors and Board Practices
Independent Non-executive Directors

• Further guidance regarding independence
• Minimum number of INEDs

13
Directors and Board Practices
Board Practices

• Code of Best Practice
• Report on corporate governance
• Audit committee
• Remuneration committee
• Nomination committee

14
Directors and Board Practices
Directors Duties and Responsibilities

• Duties and responsibilities of non-executive
  directors
• Chairman and chief executive officer
• Internal controls

Securities Transactions by Directors

• Black out period of directors securities
  transactions

15
Directors and Board Practices
Directors Contracts, Remuneration and
Appointments

• Directors service contracts
• Disclosure of directors remuneration

16
Corporate Reporting and Disclosure of Information
17
Corporate Reporting and Disclosure of Information

• Quarterly Reporting
• Half-year Reporting
• Full-year Reporting

18
Corporate Reporting and Disclosure of Information
Quarterly Reporting

• Quarterly reports
• Quarterly results announcements

Half-year Reporting

• Half-year reports
• Half-year results announcements

19
Corporate Reporting and Disclosure of Information
Full-year Reporting

• Annual reports
• Summary financial reports

20
Consultation Deadline
22 April 2002