Best Corporate Governance Awards recognises top all-rounders and up-and-comers
Investors demand it and regulators insist that companies implement it. Corporate governance is here to stay.
It is playing an increasingly important role in business, and “companies with good corporate governance are more likely to continue to be able to attract investments, even in difficult times”, according to Mabel Chan, president of the Hong Kong Institute of Certified Public Accountants and chair of the judging panel for the 2017 Best Corporate Governance Awards.
Investors demand good corporate governance, especially in times like these when there is a certain degree of economic and political uncertainty.
And, as Hong Kong’s role as a global financial centre continues to grow – especially with the city’s close connections to the Shanghai and Shenzhen markets through Stock Connect and Bond Connect – and the city’s membership of the Asian Infrastructure Investment Bank, high standards of corporate governance are expected by investors.
“Adopting sound practices and disclosure is not just a matter of compliance for companies, but also part of their culture. As they operate on a more transparent basis, they will have a stronger risk management and internal control, and seek to engage their stakeholders and shareholders more regularly,” Chan says.
Now in its 18th year, the Hong Kong Institute of CPA's Best Corporate Governance Awards has a new category added to the existing set of honours. The new category is the Non-Hang Seng Index-constituent companies for medium market capitalization.
Derek Broadley, chairman of the organising committee for the 2017 Best Corporate Governance Awards, says he expects a record number of 700 annual and sustainability reports to undergo an initial review this year.
The Institute is also aiming to broaden its field beyond reviewing general disclosures in annual reports, and added three new types of commendations for internal control and risk management; board and audit committee operation and functioning; and website corporate governance information.
“The reason that we introduced those awards for the first time last year was that we felt it was quite important to identify and recognise companies that are making efforts in these particular areas, although they might not be able to meet the overall standard to actually get a Diamond, Platinum or Gold award in the main categories,” Broadley explains. “So we wanted to broaden the base of the companies that we can acknowledge and encourage, especially if they are making targeted efforts in those areas.”
These three areas of corporate governance are important, Broadley adds, as they are strong indicators of a high-level commitment to transparency and accountability to shareholders and other stakeholders.
The corporate reporting for the period covered in the 2017 Awards will be affected by the Hong Kong stock exchange’s upgrading of the minimum internal control and risk management requirements under the Corporate Governance Code.
The stock exchange also made revisions to its Environmental, Social and Governance Reporting Guide. The review will take these changes into account as sustainability and social responsibility reporting continues to be an integral part of the competition this year, Chan says.
“Not surprisingly, the companies that win awards in the main categories tend to be the best in most of the main areas of governance practices,” says Patrick Rozario, chairman of the review panel of the 2017 Awards. “With the changes this year, we are really taking steps to identify some of the companies and public sector organisations that are up and coming in corporate governance terms – the next tier, so to speak.”
As part of the awards process, the Institute alerts reviewers and judges as to what is happening in terms of corporate governance standards and requirements for the year, and what the focus areas will be, depending on industry trends and local developments.
In addition to information provided in annual and sustainability reports, and – in some cases – on websites, reviewers and judges may take into consideration any other public information, such as news reports, that may be indicative of the governance practices and culture of individual companies.
More than 20 awards are expected to be given out this year and the closing date for entries is August 14. Results will be announced in late November.
Visit the 2017 Best Corporate Governance Awards webpage (www.hkicpa.org.hk/bcga2017) for details of entry procedures and judging criteria.