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Overview: Recent Update to Hong Kong’s Listing Rules

Published on : 03 Nov 2023

Recent Update to Hong Kong’s Listing Rules

The Stock Exchange of Hong Kong Ltd. published a consultation paper on reviewing the Corporate Governance Code and Related Listing Rules in April 2021. The primary focus of the consultation paper was to instil changes in the mindset of an issuer's board, incentivize board refreshment and succession planning, promote board independence, enhance diversity amongst issuers, improve communication between issuers and their shareholders, and protect market integrity. Conclusions of the above paper were published on 10 December 2021. The market received tremendous feedback, and on the basis of the same, amendments were scheduled to be made to the Listing Rules effective 1 January 2022 accordingly.  

It ought to be noted that like all existing Code Provisions, the new Code Provisions operate on a ‘comply or explain’ basis, pursuant to which listed issuers must state whether they have complied with the relevant CPs in their annual or interim reports (as appropriate), and if the listed issuers deviate from such new CPs, considered reasons for the deviation, and an explanation of how good corporate governance was nonetheless achieved, should be provided. Variation of CPs and failure to provide considered reasons and an answer in the manner set out in the Corporate Governance Code ought to be regarded as a breach of the Listing Rules. Further, in respect of the compliance requirements under the revised Listing Rules and disclosure to be made under the new MDRs, compliance and disclosure is mandatory. Failure to comply or disclose pursuant to such provisions will be regarded as a breach of the Listing Rules.

In total, amendments can be seen to be made primarily in five aspects: culture, which includes an alignment to the company's culture with its purpose, value & strategy, and Anti-corruption and whistleblowing policy. Secondly, it talks about Board independence which includes that all independent INEDs should serve more than nine years. Thirdly, it mentions diversity which provides for the single gender board and workforce diversity. Fourthly, it touches the angle of the nomination committee and renaming and restructuring the Corporate Governance Code by establishing a link with ESG practices.


To align the company’s culture with its purpose, value and strategy, the Stock Exchange believes that when a company’s culture is properly aligned with its design and leadership, the company can achieve long term sustainability. The Stock Exchange accepts that, as stated in its Consultation Paper. While it is not possible for the Exchange to prescribe a list of information for disclosure that suits all issuers, disclosures on “culture” may include the following issues which may be helpful to stakeholders to understand the company’s culture. Such disclosures should be precise and succinct (in general, should be no more than one page):

  • Description of the company's vision, value, and strategy, alongside the company's culture, and how all these affect the business model.
  • Description of the success measurements of the company (e.g., KPIs in terms of revenue growth; profit margins; return on equity; and market share), and discussion on how the company’s desired culture affects or contributes to the company’s performance.
  • Discussion on the measures used for assessing and monitoring culture (e.g., any specific indicators such as turnover rate; whistleblowing data; employee surveys; breaches of code of conduct; and regulatory breaches).
  • Description of the measures to ensure the desired culture and expected behaviors are communicated to all employees, for example, by developing a code of conduct.
  • Information on the forum(s) available for sharing ideas and concerns on any misconduct or misalignment identified and how they are dealt with.
  • Discussion on the company’s financial and non-financial incentives which support the desired culture.”

Thus, the new CP is not intended to codify ‘culture’, but to highlight the board’s role in

  • Defining the company’s purpose, values, and strategy.
  • Developing the culture to support the pursuit of success. (The Stock Exchange will issue guidance with suggested disclosures.)

Anti-corruption policy and whistleblowing policy

As accepted in many jurisdictions, anti-corruption and whistleblowing policies are crucial to establishing a healthy corporate culture. Such policies can raise awareness among the employees and management of listed issuers. Under the existing Environmental, Social and Governance Reporting Guide (Appendix 27 to the Main Board Listing Rules), listed issuers are already required to disclose information relating to anti-corruption and whistleblowing policies and their implementation. The Stock Exchange has indicated that on their individual circumstances, listed issuers may choose to have stand-alone anti-corruption and whistleblowing policies or include the relevant provisions in their code of conduct or other guidelines.

Board independence

All independent INEDs serve more than nine years; in this case, the new CP requires that the listed issuer appoint a new INED at the next annual general meeting. A transition period will be allowed to implement this new proposal, i.e., th  e financial year commencing on or after 1 January 2023, to minimise the challenges in finding a suitable new INED.


Single-gender board the Stock Exchange has decided to tighten the requirement for issuers to phase out single gender boards by stating in the Listing Rules that the Stock Exchange will not consider diversity to have been achieved if there is a single gender board; the absence of a prescribed percentage in the Listing Rules does not mean having a sole director of a different gender on the board is considered sufficient. For a listed issuer who already has directors of both genders on board on or after 1 January 2022, if the listed issuer subsequently fails to meet such requirement, it must immediately publish an announcement containing the relevant details and reasons. The listed issuer must appoint appropriate members to the board to meet the requirement within three months after failing to meet such requirement.

Workforce diversity – At the workforce level, listed issuers will be required to disclose: (i) gender ratios in the workforce (including senior management), (ii) any plans or measurable objectives that they have set for achieving gender diversity, and (iii) any mitigating factors or circumstances which make achieving gender diversity across the workforce (including senior management) more challenging (or less relevant).

-   Nomination committee

Chairman of committee – The Listing Rules require listed issuers to establish a nomination committee. The Stock Exchange recognises the role of the board chairman in overseeing the board’s composition and succession planning, and ensuring its effective functioning, and will allow either the board chairman or an INED to chair the nomination committee with a majority of its members comprising INEDs.

-          Renaming and restructuring the CG Code and establishing link with ESG

Restructuring CG Code –– While the structure of Appendix 14 will be revised to enhance its flow and readability, and drafting amendments will be made to improve clarity, the Stock Exchange has stated that such changes involve no change in policy direction and will not result in any additional corporate governance requirements other than those referred to in the above table.

Establishing link between CG Code and ESG –– As corporate governance and social responsibility are intrinsically linked; it is believed that an effective governance structure should include governance of ESG matters to ensure that listed issuers evaluate and manage ESG risks. The Listing Rules will be amended to ‘‘link’ the CG Code (Appendix 14) and the ESG Reporting Guide (Appendix 27).

ESG reports – ESG reports must be published at the same time as annual reports.

Thus, the above-mentioned summarises the amendments as brought out by the Hong Kong Stock Market Regulator.

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