The increased use of public money to bail out large companies has made it more urgent for governments and regulators to tighten and upgrade corporate governance practices.
Many governments have pumped substantial funds into the financial system to shore up their economies and rescue corporations considered 'too big to fail', says April Chan, president of the Hong Kong Institute of Chartered Secretaries (HKICS).
'Regulatory bodies have introduced more regulations to ensure the money has been used adequately to protect the interests of all the stakeholders and to be accountable to the general public. The media, including traditional and social media, have exposed many cases of failed compliance with regulations. Sometimes the failure in good governance can be catastrophic,' she says.
HKICS hosted its 12th Annual Corporate and Regulatory Update conference last month to address pressing governance and compliance issues.
Hong Kong's regulators have continued to tighten corporate governance practices. For instance, Hong Kong Exchanges and Clearing, which operates the city's stock exchange, organised a consultation on the revision of the Code and Practices of Corporate Governance introduced in 2005.
In its fourth review of corporate governance disclosure in annual reports for 2009 by 132 companies, the stock exchange found 99 per cent of companies complied with 41 out of the 45 code requirements. However, there are doubts over whether the companies in substance complied with requirements and if their compliance reached the same standard.
This has led to the realisation that a single code may not apply to all companies because of their different businesses and cultures.
