Business
HKEX’s Proposed Cap on Independent Directors’ Tenure Sparks Controversy Amid Economic Crisis: A Shift in Focus Needed?
The decision by HKEX to limit the term of independent directors has stirred controversy in the midst of economic instability. The exchange operator is encountering opposition to its plan to restrict the number and term of independent non-executive directors (INEDs), with critics contending that the timing is improper and the emphasis should be on keeping afloat.
The proposal by Hong Kong Exchanges and Clearing (HKEX), the stock exchange operator, to limit the quantity and term of independent non-executive directors (INEDs) is confronted with difficulties due to conflicting perspectives from directors, companies, and institutional investors.
"Now is not the appropriate time to alter the regulations for independent non-executive directors," stated Allan Zeman, the originator and head of Lan Kwai Fong Holdings, who holds the role of an independent non-executive director for six firms.
"In my over 50-year stay in Hong Kong, I've never seen the economic situation this dire," stated Zeman. As the man behind the transformation of the Lan Kwai Fong region in Central into a renowned hub for evening entertainment, Zeman shared these insights in a private discussion with the Post.
As corporate insolvencies reach an unprecedented level, the magnate expressed that the emphasis must be on survival and advancing their operations. He further mentioned that companies should not be compelled to alter their autonomous board members and incorporate new ones.
In June, the Hong Kong Stock Exchange (HKEX) put forth several recommendations aimed at enhancing corporate governance. Among these was the prohibition of independent non-executive directors (INEDs) serving on over six boards for a period exceeding nine years per board. Companies that have recently been listed must comply with this regulation by January 2025. Meanwhile, established companies have a grace period of three years to address any issues of "overboarding".
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