'Personal reasons' for quitting to be disclosed
The stock exchange and Hong Kong Institute of Directors jointly issued guidelines yesterday restricting when members of a publicly listed company board can cite 'personal reasons' to explain a resignation, in a bid give investors a better understanding of the departure.
According to the guidelines, which come into immediate effect, 'personal reasons'' can only refer to 'illness, bereavement or other genuine personal difficulties that change the directors' circumstances''. Companies must also clearly detail the circumstances.
Directors who have stepped aside due to being arrested, pushed out in a boardroom battle, or facing a conflict of interest will have to disclose to the public the real situation.
'This is intended to enhance investor protection and the quality of disclosure,' said Peter Wong Shiu-hoi, the chairman of the institute.
'There have been complaints in the media and among market players that far too many directors have resigned and simply said they left for personal reasons. In fact, many of the real reasons for them resigning were not so personal.'
In a recent case, Jack So Chak-kwong resigned as deputy chairman of PCCW after he was castigated by the company's board for poor performance, and its chairman and controlling shareholder, Richard Li Tzar-kai, expressed a desire for Mr So's resignation, according to sources.
Mr So has repeatedly insisted he left for unspecified 'personal reasons', as has the company.
The stock exchange said if the firms did not follow the guidelines, it might consider them as breaching the listing rules' disclosure requirements that could lead to a penalty.
'It should help improve transparency,' said Stephan Cheung Yan-leung, a professor of finance at City University of Hong Kong. 'If they are required to give the real cause, it will help signal to investors if something went wrong in the company that led to the departure.'
