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Integrity is key: Hong Kong’s new Corporate Governance Code mandates that issuers establish anti-corruption and whistleblowing policies

posted 2 years ago

By Kareena Teh, Catherine Wong:

In our earlier publication “COVID-19 heightened corruption risks – A Hong Kong guide[1], we forewarned that COVID-19 and the challenges it posed to enforcement authorities, organizations and their workforce would allow corruption to thrive.  The 2020 annual report of the Independent Commission Against Corruption (the “ICAC”) released in July 2021 and the enforcement actions taken in Hong Kong in the period following our last publication bears this out.  While corruption complaints (for both private and public sectors) were down, there were still 1,454 pursuable complaints, and in the second half of 2021, over 85 individuals, including some involved in the listed sector, were charged by the ICAC for corruption related offences[2].

It is therefore not surprising that following the public consultation on the Review of Corporate Governance Code and Related Listing Rules (the “Consultation Paper”)[3] which commenced on 16 April 2021, the Hong Kong Exchanges and Clearing Ltd (the “HKEX”) has mandated that all issuers establish anti-corruption and whistleblowing policies and procedures, or include relevant provisions in their code of conduct or other policies (together, the “New Requirements”)[4].  These New Requirements are being implemented through the introduction of new code provisions under the Corporate Governance Code (the “CG Code”) as set out in Appendix 14 to the Main Board Listing Rules and Appendix 15 to the GEM Listing Rules[5] (collectively, the “Listing Rules”) that will come into effect on 1 January 2022.  

In this publication, we consider the corruption complaints and enforcement actions in the second half of 2021, the New Requirements in the CG Code, and the new Corporate Governance Guide for Boards and Directors (the “CG Guide”) published on 10 December 2021[6] to assist issuers’ compliance with the New Requirements.  As a guide to issuers and other organizations considering establishing and/or revising their policies and procedures, we set out additional steps that can be taken to ensure that the policies and procedures are fit for purpose and effectively implemented.  READ FULL ARTICLE 

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Note: This material has been prepared for general information purposes only and is not intended to be relied upon as professional advice for any cases. Should you need further information or legal advice, please contact us.

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[1] COVID-19 heightened corruption risks-A Hong Kong guide | LC Lawyers (eylaw.com.hk)

[2] 2020 Annual Report: www.icac.org.hk/icac/annual-report/2020/

[3] Consultation Paper: Paper on ESG (hkex.com.hk)

[4] Currently, it is a requirement under the ESG Guide to disclose anti-corruption and whistleblowing policies or information, implementation of relevant procedures and material incidents on a “comply or explain” basis.

[5] CG Code: Main Board: appendix_14 (hkex.com.hk); GEM Board: Appendix 15 Corporate Governance Code and Corporate Governance Report | Rulebook (hkex.com.hk)

[6] CG Guide: HKEX_GFBD_EN_211210_v5

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