Hong Kong poised to take an axe to multiple directorships to enhance corporate governance

For Abraham Razack, the idea of a media interview involves meeting over drinks in the middle of a work week. It may just be a measure of how things get done in Hong Kong – by nursing relationships over gins and tonics at a favourite club.

Razack, also known as Abraham Shek Lai-him, is probably one of Hong Kong’s busiest corporate directors, currently sitting on the boards of 18 publicly traded companies as an Independent Non-Executive Director (INED), taking home over HK$5 million (US$639,000) in annual fees, according to Bloomberg’s data. That does not include directorships in scores of private companies, and memberships in a dozen statutory bodies and government committees.

The boards he sits on cover the gamut of Hongkongers’ daily lives, spanning education, mass transport, property, financial services and their pension. He is also a member of the city’s Legislative Council, representing the real estate and construction constituency.

Those clubby days may be numbered, as Hong Kong’s stock exchange is poised to implement a new set of listing rules on January 1 with a “comply and explain” provision that requires companies to seek shareholders’ approval of why a director is able to handle more than six simultaneous board seats.

There are 65 directors in Hong Kong who each sits on more than six boards, sharing 6.6 per cent of the city’s corporate seats between them, or 499 out of 7,564 seats, according to data by Webb-Site.com, operated by corporate governance activist David Webb.

On average, each director in a Hong Kong-listed company sits on two boards, putting the city in fourth place globally in the rankings of management density, according to Institutional Shareholder Services (ISS), a shareholder advisory firm. Only Sri Lanka, the Philippines and India rank higher.