BOC makes corporate governance top 10 list
Lender and Shenzhen Expressway are the first two mainland firms named
BOC Hong Kong (Holdings) has been named for the first time as one of the top 10 locally listed companies with best corporate governance, reflecting the lender's substantial improvement after a scandal related to disgraced Shanghai tycoon Chau Ching-ngai in 2002, according to a study by City University and Hong Kong Institute of Directors.
The Hong Kong unit of Bank of China and H-share firm Shenzhen Expressway are the first two mainland firms to enter the top 10 list, which is dominated by blue chips such as HSBC Holdings, Hong Kong Exchanges and Clearing, Hang Seng Bank, MTR Corp, CLP Holdings and Li & Fung.
The remaining two are property investor Hysan Development and medium-sized computer chip designing firm Solomon Systech (International).
'It is particularly good to see BOC Hong Kong come out from the shadow of corporate governance scandal and turn itself into one of the best in town,' said Stephen Cheung Yan-leung, a professor at City University who led a team to assess and score 174 listed companies based on public information last year.
BOC was hit by a corporate scandal a few years ago when its former chief executive Liu Jinbao allegedly gave suspicious loans to Chau to fund his takeover of Shanghai Land Holdings.
Liu received a suspended death sentence in August last year on separate corruption charges.
Mr Cheung said when BOC first listed in 2002, it disclosed little corporate information.
However, he said the lender had improved substantially by adding risk management measures, disclosure and other corporate governance practices based on recommendations by the three-member investigative committee headed by former Securities and Futures Commission chairman Anthony Neoh.
The committee was appointed by the bank in June 2003 after the Hong Kong Monetary Authority called for external auditors to investigate the bank's loan approval procedures on the HK$2.1 billion credit line given to Chau in mid-2002.
Mr Cheung also said the inclusion of CLP, Hysan, Li & Fung and Solomon Systech on the top 10 list dispels the prevailing myth that family-controlled and small firms do not have good corporate governance.
The companies were assessed by their protection of shareholder rights, disclosure and transparency, board responsibility, as well as the equity and roles of their shareholders. A similar study was conducted in 2004 based on the information from 2002.
With a maximum score of 100 as representing the best in corporate governance, the companies were assessed in the way they protect the rights of shareholders, equity of shareholders, role of stakeholders, disclosure and transparency and board responsibility.
Overall, the news was encouraging as Hong Kong-listed firms improved to an average score of 70.87 from 61.14 in the previous study in 2002.
Ninety per cent of companies saw improvements.
There was, however, a general drop in scores relating to company's disclosure of stakeholders to 40.21 in 2005 from 53.42 in 2002, the study found.
Corporate leaders
Top 10 in corporate governance
BOC Hong Kong (Holdings)
CLP Holdings
Hong Kong Exchanges and Clearing
HSBC Holdings
Hang Seng Bank
Hysan Development
Li & Fung
MTR Corp
Shenzhen Expressway
Solomon Systech (International)
