He stressed the need for adequate internal corporate discipline and for companies to constantly evaluate their systems to see if they needed 'improving, upgrading or new concepts'.

As for the desirability of the city's capital markets, since the introduction of 'red-chip' companies, fewer mainland enterprises have sought to list in Hong Kong compared with the 1990s. But Cheng believes Asians and Middle Easterners, seeking investors, need look no further than Hong Kong because the stock exchange's listing division has streamlined procedures, greatly enhancing the city's attractiveness for international fundraising.

'It is important to send the message to not just mainland and Taiwanese companies, but to the whole of Southeast Asia, the Middle East and Russia that Hong Kong is the best place to raise capital,' he said.

As for the role of independent non-executive directors (INEDs) in the coming decades, Cheng is cautiously optimistic. Although they are expected to play an important role in monitoring executives in most markets, they are hindered because they do not participate in day-to-day company operations and, consequently, are not privy to a great deal of information.

'The role of INEDs has not changed because we must still monitor CEOs and managers and guide them on proper disclosure of financial and other [market relevant] information for investors and regulators,' he said. He believes INEDs do add value because they offer boards 'an alternative view'.

But no system is fail-safe as there are limits to how much INEDs can do because they ultimately 'depend on the willingness of management and executives' to release salient and timely information.

Reconciling the gap companies' face between the information markets and from their annual and financial reports, and that which is mandatory under statutory reporting requirements, is challenging.

But with the mainland's adoption of international financial disclosure standards in line with International Financial Standards, things appear to be going in the right direction.

However, Cheng asserts that engendering a culture of compliance, disclosure and transparency on the mainland requires consequences for non-disclosure of important market information, even to the extent of criminalising certain practices. 'Disclosure is the key,' he said, because 'it boosts investor confidence and makes it cheaper to raise capital - something all companies can appreciate'.

Cheng believes mainland companies still have some ways to go in tightening up their accounting and corporate governance.

'They need to understand the reasoning behind rules; it's not just about complying for the sake of compliance,' he said.

'What we need are information, practitioners and markets predicated on integrity, and a community that recognises and rewards integrity as a prime value.'

All things considered, Cheng is buoyed by the evolution of the mainland's corporate governance.

'Things have improved immensely since I first got involved in mainland markets,' he said.

But he eschews attempts by Beijing to 'outdo European and American market disclosures' because doing so will not help the development of corporate governance on the mainland. 'There is better training of directors and more qualified people are serving as INEDs,' he said.