Legislators' business posts raise concerns
Questions arise over the number of roles some accept, and their capacity to handle multiple duties in a satisfactory manner
Fund managers and brokers are concerned at the trend of legislators retaining multiple corporate directorships, but oppose any proposal to limit the number of board positions a person can accept.
New People's Party deputy chairman Michael Tien Puk-sun, for example, is a director of 42 companies, while others are on the boards of anywhere between 10 and 17 companies.
Hong Kong Institute of Directors chairman Kelvin Wong Tin-yau said holding too many directorships was hardly ideal.
"Directors, particularly of listed companies, have to spend a lot of time reading documents to prepare for and attending meetings," Wong said.
Many companies also follow similar accounting schedules, meaning they release annual and interim results around the same time. "This would be a problem if someone is a director of many listed companies as the person would need to review the financial statements of several companies at the same time. And if the person is also as legislator, it would make the job even more difficult," Wong said.
However, he rejects the idea that Hong Kong should follow the system on the mainland, where one person can be a director of no more than five listed companies.
Hong Kong Exchanges and Clearing in 2010 conducted a consultation process over introducing a similar cap but dropped the idea as the market feared that such a cap would make it harder to find independent directors. It was also pointed out that there are no such limits in Britain, the United States and other developed markets.
The consultation revealed there were about 45 people in Hong Kong who had more than five independent directorships at the end of August 2010.
Hong Kong Institute of Certified Public Accountant's president Keith Pogson said an individual should not take up too many directorships at the same time as a matter of good corporate governance practice.
"If someone has too many directorships, they may not have sufficient time to understand the affairs of each company or time to attend all meetings of all companies," Pogson said. "Also, they may find it more difficult to prevent conflicts of interests as being on more boards increases the probability of representing companies that are either competitors or linked."
But he also opposes the idea of a cap. "Some companies are big and complex, and demand a lot of time and attention of the directors. But for some smaller, privately owned companies, that may not be the case. It's hard to consider a cap without considering the size of the companies."
Angelina Kwan Wai, the managing director of Reorient Financial Markets, said investors as well as regulators would like to see directors of listed companies devoting sufficient time, care and skill to the organisations.
With the provisions set out in the corporate governance code, Kwan believes it may be difficult to justify taking up too many directorships, in particular for Hong Kong companies.
"We only have 24 hours in a day and it is reasonable to ask if directors will have enough time to meaningfully prepare, attend and contribute to board meetings and discharge any executive responsibilities they may have while juggling a demanding full-time job," she said.
Kwan is an executive director of a listed company and serves on various non-profit and non-public boards.
"A few directorships, in addition to a full-time job, will be a very heavy workload, if you comply with the standards set by Hong Kong law and the HKEx's requirements and expectations," she said.