Changes will result in many independent directors resigning A wave of resignations of independent non-executive directors is expected over the next two months as a new listing rule tightens criteria on their qualification. Under the new rule, effective from September 30, all professionals - including lawyers, accountants and investment bankers - will no longer be qualified to act as independent non-executive directors if their employing company has provided services to the listed firms or controlling shareholders within the preceding 12 months. The rule change is aimed at ensuring the impartiality of independent non-executive directors, as their duty is to speak to the board on behalf of the minority shareholders. A listed company executive said that, as it was common for professionals falling into this category to act as independent non-executive directors, the new rules would lead to a mass resignation of directors. 'The rule change will mean many of the existing independent directors who are now qualified will no longer be qualified from September 30. They have no choice but to resign from the posts within the next two months,' the executive said. Another rule change effective from September 30 will require all listed companies to have at least three independent non-executive directors, instead of the two now mandated. In addition, all companies will have to have at least one independent non-executive director with a professional financial background. Patrick Sun Ting-wah, honorary chief executive of the Chamber of Hong Kong Listed Companies said: 'With these stringent requirements, the chamber worries many small and medium-sized listed companies will find it difficult to find enough independent non-executive directors before the deadline.' Herbert Hui Ho-ming, chairman of the Hong Kong Institute of Directors, said many listed companies had contacted the institute for help in finding suitable independent non-executive directors. The institute has a database of people who are interested in acting as independent non-executive directors so that it is able to act as a matchmaker. 'Many independent directors will need to declare that they are not independent after the rule changes. A search for replacements has begun for these directors and we are set to see more such searches in future,' Mr Hui said. Retired accountants and lawyers would be the best candidates to take on the role, he said, adding that, 'there are many retired professionals who have good knowledge of the business sector' who would also be suitable. But Mr Hui also repeated his call for fair remuneration and directors' insurance coverage for those that excepted the role. Hong Kong companies on average only pay about $100,000 per year to independent non-executive directors, with the lowest amount being $10,000 and the highest $1.17 million. This is lower than in overseas markets such as Britain, where the average pay is about $300,000.