The Hong Kong Exchange (HKEX) has thrown down the gauntlet with its recent amendments to corporate governance rules. These changes don’t just tweak existing practices—they aim to redefine what effective governance looks like. By addressing critical areas like long-standing director independence, board diversity, and mandatory director training, HKEX isn’t just keeping up with global standards; it’s setting a new benchmark. In a world where the TSX, NYSE, and Nasdaq still lean on outdated norms, HKEX’s progressive approach challenges other exchanges to rethink how they govern for the future. Simply put, HKEX’s reforms aren’t about compliance—they’re about leading the charge toward smarter, more transparent, and more accountable corporate governance.
Long-Standing Directors and the Myth of Independence A cornerstone of the HKEX reforms is addressing the independence of long-serving directors. Directors who serve more than nine years will no longer qualify as independent under HKEX rules, unless they step down for a three-year “cooling-off” period. This stands in stark contrast to the NYSE, Nasdaq, and TSX, where no explicit tenure limits exist for independent directors. Yet, can a director truly remain impartial after a decade or more of ingrained relationships with management and the board? The HKEX recognizes that prolonged tenures can erode objectivity, blurring the lines between oversight and allegiance. By setting clear boundaries, HKEX prioritizes genuine independence over symbolic gestures.
Mandatory Training: Building Smarter Boards HKEX’s mandatory training requirements for all directors, including a rigorous 24-hour program for first-time directors, ensure that boards stay informed on critical governance issues, risk management, and evolving ESG considerations. Comparatively, the TSX, NYSE, and Nasdaq encourage training but fall short of mandating it. In today’s fast-changing corporate environment, is it responsible to leave director education optional? HKEX’s approach ensures directors have the knowledge and tools needed to make informed decisions, elevating board effectiveness.
Diversity Beyond Tokenism Diversity is more than a buzzword at HKEX. The exchange mandates board diversity policies with annual reviews, requires gender diversity on the nomination committee, and insists on detailed workforce gender ratio disclosures. These requirements surpass those of the NYSE and Nasdaq, which promote diversity without enforceable measures, and the TSX, where diversity-related disclosures remain largely voluntary. HKEX not only sets goals but ensures transparency in tracking progress, fostering accountability at every level of the organization.
Accountability and Risk Management HKEX’s governance reforms also elevate risk management and transparency standards. Companies must conduct annual risk management reviews, disclose dividend policy details, and provide comprehensive board performance evaluations. In comparison, the NYSE, Nasdaq, and TSX emphasize financial disclosures and audit committee oversight but lack the depth and specificity of HKEX’s rules. These measures bolster investor confidence by ensuring companies are proactive in managing risks and aligning decisions with shareholder interests.
Challenging the Status Quo The HKEX reforms expose long-standing gaps in the governance frameworks of the TSX, NYSE, and Nasdaq. By addressing issues such as director overboarding, diversity, and tenure-based independence, HKEX has made a bold statement: the old ways are no longer sufficient. Can other exchanges afford to lag behind as investors increasingly demand more accountability, transparency, and genuine independence?
If long-serving directors lose their objectivity, if boards resist diversity, and if training remains optional, can we truly say that governance is evolving? Or are we settling for a façade of reform?