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Kenneth Ko

Non-profit making and charitable organisations category gold award

THE SECURITIES AND Futures Commission's 2005-06 annual report has won the Gold Award and  received a Citation for Achievement in Corporate Governance Disclosure in the non-profit-making and charitable organisations category of HKMA's annual reports awards programme.

The recognition it has received underlines the value of good corporate governance and the tremendous efforts the SFC has made to improve regulatory standards.

Chief executive Martin Wheatley said the SFC, as a regulator, set high standards for companies being regulated and for itself.

'To gain the confidence of market practitioners and investors it is important that we deliver a clear account of how we perform in fulfilling our statutory objectives, and also the effective checks and balances we have in place in the commission,' Mr Wheatley said.

'We have an important role to play in ensuring that the industry fully embraces the principles of good corporate governance, which we believe are a fundamental investor expectation from a leading international financial centre.'

The theme of the annual report, 'Investors first', was a continuation from the previous year to demonstrate the importance of the regulator's four roles - regulation of the market, enforcement against misconduct, investor education, and facilitation of market innovation and introduction of new products.

The four roles were presented in different theme pages that described the philosophies behind them and the key achievements. The role of facilitation was highlighted for the first time in the 2005-06 annual report.

The annual report was designed and written with the aim of communicating effectively with  the SFC's stakeholders, enhancing transparency and accountability.

According to the regulator, whose efforts have been recognised by the HKMA's awards programme in successive years, the SFC annual report was designed to be reader-friendly, clear, interesting and full of useful and accurate information.

The SFC said it benchmarked itself against the guide on corporate governance for public bodies set out by the Hong Kong Institute of Certified Public Accountants and put emphasis on the disclosure of its corporate governance structure and practices.

As a statutory body, the regulator said corporate governance was particularly important in its relationship with its stakeholders and the community at large. The commission was accountable to the public for the proper use of funds, and had to assure stakeholders of quality and ethical standards in order to earn their trust and support.

Mr Wheatley said responsibility for good corporate governance practices did not lie with the regulators, but rather collectively with directors, intermediaries and investors.

Having instituted regulatory reforms to promote good corporate governance, regulators had to guard against complacency and strengthen enforcement efforts to improve standards, he said.

'The board of directors, especially the independent non-executive directors, have a key role to play in scrutinising the business of listed companies and bringing independent views on issues such as standards of conduct,' he said.

'Intermediaries play a pivotal role in supporting companies' efforts to improve their corporate governance practices and ensure the integrity of information. Investors must proactively demand better corporate governance practices by exercising their rights at general meetings.'

The SFC annual report includes a corporate overview, divisional reports and financial statements.

The corporate overview starts with the chairman's statement, followed by a profile of the directors, a review of staff matters, a summary of corporate governance, a summary of achievements and work in progress, and a three-year comparison of key figures and significant events.

The divisional reports cover the work of the regulator's four operational divisions and supporting departments over the past year in meeting its statutory objectives.

The financial statements were prepared in accordance with International Financial Reporting Standards.

The regulator  supplemented the report with full details of membership of committees, panels and tribunals, a list of consultations, codes and guidelines that were published, and an index of important terms with a glossary for easy reference.

The 2005-06 annual report also included for the first time a section on social responsibility as the regulator considered that its work should have a positive social and environmental impact.

This section discussed its staff volunteering programmes and initiatives to enhance its communication and environmental protection measures.

Also included was an expanded section on commission staff that discussed the management's communication with staff, remuneration policy, training and development, welfare and employee relations. The report was prepared with the concerted effort of all of the commission's divisions and departments.

Judges' report

'An all-round, excellent report serving as an outstanding example on transparency and good corporate governance practices.'



SFC raises bar on standards