HONG KONG SAR, CHINA Trends and Developments Contributed by: Vincent Lung and Mike Yeung, Parkside Chambers
Artificial intelligence Last but not least, after a year of rapid change in the global and Mainland China’s AI landscape, there appears to be a trend of Hong Kong companies iden - tifying generative AI and digital oversight on risk man - agement as priority agenda items in the near future. Although, at present, Hong Kong does not have a sin - gle corporate governance statute requiring all com - panies to appoint AI-specialist directors or establish AI committees, boards of companies are prioritising director education to build baseline AI literacy and to better understand strategic opportunities alongside ethical, operational and cybersecurity risks. The most immediate legal risks often arise from personal data, confidentiality, misleading outputs, IP infringement and inadequate supervision. In using AI, boards of companies should approve the AI strategy and risk appetite. The audit or risk committee should oversee controls, assurance, data governance, cybersecurity and incident reporting. Management should main - tain an AI inventory, implement policies and monitor compliance. Legal, compliance, procurement, data protection and cybersecurity teams should review higher-risk AI tools. Internal audit should also provide assurance where AI use is material.
corporate governance would clearly be the answer to retain investor confidence in market integrity. The continuing trend of raising corporate governance standards is also crucial when there is a seeming incli - nation on extension of the currently limited weighted voting rights regime, which was first introduced in April 2018. HKEx in as early as 2020 published its consultation paper seeking public feedback on a pro - posal to also allow corporate entities to benefit from the weighted voting rights-structured listing which is presently only for the emerging and innovative sec - tors, and in March 2026 revisited the issue (see Paper on Proposals to Enhance Listing Competitiveness). Whilst the weighted voting rights structure will give incumbent directors superior voting power the free - dom to run a business to maximise growth and value for shareholders over the long term, there is concern on entrenchment risk as the non-controlling owners may not necessarily have sufficient power to oust those incumbent directors who are in a plot to extract private benefit. Granted that rules will be devised to safeguard the interests of minority shareholders, investor protection will largely lie in the presence of top level corporate governance standards that con - tinues to drive the best practice boardroom behaviour.
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