Opinion2013: Hong Kong's year of regulatory reform

Happy New Year to all readers of White Collar. Last year marked a plethora of reforms and challenges for many listed companies, accountants, investment bankers, even the stock exchange and the regulator.

What is in store this year? Well, the list is long on the regulatory side, and immediate.

Starting today, all listed companies must follow a new law requiring disclosure of price-sensitive information in a timely manner, or face a market misconduct tribunal hearing and a fine of up to HK$8 million. Meanwhile, directors may face a ban for a maximum of five years or be forced to attend corporate governance classes.

This change follows a decade-long debate about tougher penalties for failing to disclose information. It will likely include information on share prices, takeover and merger news, any substantial change in financial results, or sudden loss of assets. Before today, the only penalty for directors and companies not making disclosure of price sensitive information was a slap on the wrist from the stock exchange. The new rules will now add some teeth to the regulation.

Secretary for Financial Services and the Treasury Professor Chan Ka-keung said the new law will be "a good first step forward for a reform plan to establish a continuous disclosure culture in the local market".

Listed companies will also need to appoint more women or younger staff as directors; the HKEx requires that from September all such firms must have a more diverse board or be asked to explain why. The trend aims to end the "the all-boys club" mentality that now means only 10 per cent of directors are women, with most seats filled by middle-aged men.

Professor Chan said the HKEx could act as a role model in appointing female directors as the bourse is among the 40 per cent of listed companies with no women on its board. The HKEx has a 13-member board, with six of the directors appointed by the government. Professor Chan, please take the lead!