bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

helpersCheckIsPostiesArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

moreOnThisArticles

urlAlias

commentCount

sponsorType

authorLocations

authors

paywallTypes

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

socialHeadline

headline

flag

firstTopic

glossary

flattenTypeIds

publishedDate

additionalInfoBoxes

images

image

relatedLinks

relatedNewsletters

__typename

createdDate

sponsor

factSheets

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

copyrighted

customTimezone

liveContents

SCMP Reporter

STOCK exchange rules on corporate governance were last night tightened a notch with a new requirement to make firms tell investors if they are complying with the exchange listings rules.

  At the same time, the exchange released a survey which shows Hong Kong firms have met minimum disclosure in interim and final results, but could still do more.

   Of the more than 1,000 sets of interim and final results studied by the exchange last year, only four required further clarification by way of a second announcement.

  Listings chief Herbert Hui said he was pleased with the disclosure level. 'However, there are still areas which warrant further attention such as commentary on activities and explanations for fluctuations in profit and turnover,' he said.

 Exchange listing division assistant head Roy Huang said the latest rule change on corporate governance would reveal the true state of corporate governance in Hong Kong and allow investors to make more informed decisions.

  The code was introduced in August 1993, following calls for more detailed provisions included in the Cadbury report into corporate governance.

   The amendment to the listings rules will not make compliance with the code itself mandatory but will require companies to state in interim and final reports where the firm is non-compliant and explain why.

   Mr Huang said the exchange had 'no idea' how high the level of compliance was in Hong Kong.

  'One of the problems seems to be that one or two people who have sat on a couple of boards in Hong Kong have said 'this is how things are being done'.

  'The evidence is anecdotal - there is no real empirical data.

   'This won't answer all our questions, but it will answer some.'  Institute of Chartered Secretaries chief executive John Brewer welcomed the move and said the change was 'the next logical step'. Companies have had time to get used to the code and it is not surprising this move has been made,' he said.

  'There are not going to be any howls of anguish from directors though. The requirements of the code are not particularly demanding.'   Mr Brewer said he found it strange that considering how well firms were reporting, they still released their results so late.

   'I find that odd. I find it strange that are not telling the exchange until so late sometimes,' he said.

  He said the next move should be better dissemination of results.

   'Perhaps the results should be required to reach the exchange by a set time in the evening.'   Hong Kong University department of finance and accounting's Professor Bob Tricker also welcomed the change.

   'But there are warnings,' he said.

   'Lord Hanson said recently that recommendations have been long on accountability and short on encouraging enterprise.'   Mr Tricker said that the carrying out of the survey of results was good news. 'In some sense it is thrilling that the exchange is looking so closely,' he said.

  He said the survey findings were striking. Mr Brewer echoed that.

   'I have spoken to all the H-share firm company secretaries in town,' Mr Brewer said. 'They take their duties seriously. The performance is very creditable.'    OF the 15 H-share firms listed last year, four companies adopted International Account Standards and 11 adopted Hong Kong accounting standards. Eight of the newly listed H-share firms in 1994 met their profit forecasts. Twelve of the H-share companies issued details of proceeds and treatment of unused proceeds, and 11 disclosed the nature of their reserves. All companies disclosed treatment for deemed value-added tax and treatment of exchange difference on unification of yuan. Among the banks, all disclosed directors salaries and details of highest-paid employees, director information and pension schemes. Two of the 11 banks listed did not disclose information regarding major customers and were told to do so in future accounts.



Exchange tightens rules