In a low-profile consultation paper released this month, the bureau proposed reshuffling HKIRC's board to include more directors free of vested interests.

Board member Christopher To Wing said the move was intended to address the problem of directors who looked after sectoral interests rather than the interests of Hong Kong citizens.

The news comes soon after a highly critical audit commission report on the management of the Applied Science and Technology Research Institute Co. The report found that the company had hired staff on excessive salaries without proper procedures and spent HK$180,000 on fung shui advice, among other things. Chief executive Robert Yang Jih-chang took the blame and resigned.

The consultation paper suggested the HKIRC should establish a new consultative and advisory panel that 'engages a broad set of stakeholders to advise the board of directors on various issues'.

It suggested the board 'should be moved to a mix of appointed and member-elected non-executive directors to allow the board to expand the available pool from those who solely have a strong interest in domain names issue to a wider set of qualified, professional non-executives'.

The HKIRC is now governed by a board of 13 non-executive, part-time directors comprising members from six different classes - users, service providers, information technology, commerce and industry, tertiary institutions and the government. Apart from the sole government member, the directors are elected by HKIRC members for a three-year term.

The consultation paper suggested reducing the number of membership classes from six to three, with just 10 directors.

In addition, the paper said the new consultative and advisory panel should include 'a government representative and other members invited by the government from the internet community'.

The paper also recommended the HKIRC publish 'a comprehensive corporate governance framework established collaboratively with the government and through stakeholder consultation'.

Mr To, head of the user group on the board, said conflicting interests made it difficult to reach a consensus. He said the government action had been prompted by anonymous complaints that the board did not consider the views of the public.

'Internet service is an asset of Hong Kong and the directors should be accountable to Hong Kong citizens, the taxpayer,' he said.

In response to the criticism of the HKIRC, the chief government information officer said: 'It is natural that the directors will voice the interests of the stakeholders that they represent. As a member-based organisation, the organisation will and should take the interests of all stakeholders into consideration.'

He added that the changes 'are not prompted by specific complaints against the company'.

A board director for the IT industry class, Ho Pui-tak, said the board was also affected by other problems, such as low attendance and inefficient discussions.

Dr Ho said that many times the attendance at board meetings 'barely met the quorum'.

'Since the board directors are volunteers it is difficult to control the progress of discussion,' he said. 'The Chinese domain name has been discussed for three years but only put on paper this year.'

The HKIRC's chief executive officer, Jonathan Sheu, said that in 2005-2006, 11 of the 13 directors attended 50 per cent of the board meetings.

'We perceive the public consultation as a very positive move towards the further development of our company,' he said.

Booming business

Active .hk domains registered by the HKIRC have doubled since January 2004

The number of .hk domains registered on April 1 this year 135,264