HONG KONG SAR, CHINA Law and Practice Contributed by: Vincent Lung and Mike Yeung, Parkside Chambers
At least one independent non-executive director must have appropriate accounting or financial management expertise. This supports the audit committee and financial reporting process. Board Committees Listed companies must establish audit, remuneration and nomination committees. The audit committee must be chaired by an independent non-executive director. The remuneration committee must be chaired by an independent non-executive director and com - prise a majority of independent non-executive direc - tors. The nomination committee must also have a strong independent element. It is responsible for reviewing board structure, size, composition, diversity and suc - cession planning. Diversity, Skills and Training Listed issuers must maintain a board diversity policy. Single-gender boards are generally inappropriate. The 2025 HK Stock Exchange amendments (above) also strengthen expectations concerning annual direc - tor training and board skills matrices. HKEX guidance states that annual director training is mandatory for all directors of listed companies and that specified topics must be covered as a bare minimum. 3.4 Appointment and Removal of Directors/ Officers Appointment The first directors are appointed on incorporation. Subsequent appointments are governed by the arti - cles of association. Directors may commonly be appointed by the board or by shareholders in general meeting. In listed companies, newly appointed directors are normally subject to re-election by shareholders. Direc - tors must also retire by rotation at prescribed intervals under the articles and the Listing Rules. Removal Shareholders may remove a director by ordinary reso - lution, subject to statutory procedures. A director fac -
ing removal is generally entitled to notice and may make representations. The articles may also provide for automatic vacation of office in certain circumstances, such as resignation, bankruptcy, mental incapacity, prolonged absence, disqualification or breach of specified requirements. Restrictions on Appointment A director must not be disqualified from acting. Rel - evant restrictions include disqualification orders and bankruptcy and, in regulated sectors, fitness and pro - priety requirements. For regulated businesses, appointment of directors or senior managers may require regulator approval or non-objection. This is particularly common in the financial services sector. Officers Officers such as the company secretary, chief execu - tive, chief financial officer or compliance officer are appointed under the company’s internal procedures, employment arrangements and applicable regulatory requirements. Their authority is usually determined by board resolutions, delegated authority policies and employment contracts. 3.5 Independence of Directors Independence Independence is particularly important for listed com - panies. The Listing Rules contain criteria for assess - ing whether an independent non-executive director is actually and substantially independent. Relevant matters include employment relationships, business relationships, financial interests, family connections, cross-directorships, past service and other circum - stances that may affect objective judgment. Independence must be assessed continuously. It is not enough for a director to be independent on appointment if later relationships or circumstances compromise that independence. Conflicts of Interest All directors must avoid conflicts between their per - sonal interests and the company’s interests, and this applies generally to all companies. They must not
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