(HONG KONG, 5 December 2019) As the Best Corporate Governance Awards (“BCGA”) organized by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) enters its 20th year, the judges commended listed companies and public sector organizations, for their contributions to the significant enhancements of corporate governance (CG) in Hong Kong over the years, which has been vital to ensuring that Hong Kong’s standards remain in line with international standards. Although many improvements have been made, the judges urged corporations to continue to strengthen the transparency, accountability and diversity of their governing boards, heeding the changes to the Corporate Governance Code and related Listing Rules effective earlier this year. 

This year the judges gave out 26 awards – a record high and three more than last year. They found increasing quality in sustainability reporting with a record number of potential candidates for the Sustainability and Social Responsibility (“SSR”) Awards passing through initial vetting, and more SSR Awards being given out. Small-cap companies and public sector organizations are also seen to be stepping up efforts, in environmental social and governance (“ESG”) reporting.

“To preserve Hong Kong’s reputation as a leading international finance centre in the highly competitive global environment, it is vital to uphold a strong corporate governance regime. HKICPA remains as committed as ever to promoting and supporting good corporate governance and sustainability practices in the city, making sure that Hong Kong stays firmly aligned with evolving global best practices. This will help retain investor and public confidence in the Hong Kong capital market in the future,” said Mr. Patrick Law, President of HKICPA and Chairman of the Judging Panel.  

Over the years, the CG architecture, policies and practices of the average listed company have become more sophisticated. Regulators, investors and the public expect much more of companies nowadays, and this is reflected in the changes to the Listing Rules, and the progressive upgrading of the Corporate Governance Code, and the ESG Reporting Guide, under the Listing Rules. The Companies Ordinance has also been modernized and incorporates additional corporate governance requirements. “This year, we are very pleased to see a number of first-time winners in the different awards categories and from a broad range of industries”, explains Patrick Law. 

New awardees in 2019 were AAC Technologies Holdings Inc., CGN Power Co., Ltd, Vitasoy International Holdings Limited, China Mobile Limited, Landsea Green Group Co. Ltd., Drainage Services Department, Construction Industry Council, and NWS Holdings Limited (see appendix).

In selecting the award winners, the judges looked for voluntary disclosures and practices beyond the minimum legal and regulatory requirements. “BCGA aim to establish meaningful benchmarks of best practices in the Hong Kong on which other listed companies and public sector organizations can model their own corporate governance development,” said Ms. Loren Tang, Chair of the BCGA Organizing Committee. During the review evaluation process, the judges and reviewers considered companies’ overall corporate governance performance, hoping to identify clear indications of a deep-rooted, good governance culture, and assessed the transparency and scope of relevant information on matters of investor or public interest or concern contained within a company’s annual or sustainability reports.

“While there are more awards in total this year, once again no diamond awards, reserved for companies and organizations demonstrating the highest standards of CG, have been given out. The judges felt that expectations are increasing and that there is scope, even for organizations with high standards, to further raise their game. The judges see this as a valuable message to send,” Ms. Loren Tang added.

The 2019 BCGA winners were selected by an expert panel of judges. Initially around 500 annual and over 500 sustainability reports underwent an initial screening process.  Then the Review Panel carried out an in-depth assessment of the disclosures and practices of the best candidates in order to draw up shortlists for the judges to determine the winners in the different award categories. 

Areas of Improvement 

The overall awareness and understanding of corporate governance and the quality of reporting have come a long way since the inception of the Awards. The pace of change has been even faster with sustainability reporting in recent years, says the HKICPA.
 
On sustainability, the judges recorded that more companies are seeking independent external assurance for their sustainability reports, but recommended companies to develop clear strategies, objectives, and concrete targets. They should also regularly analyse and discuss the progress made towards meeting those targets. Balance, with regard to the positives and negatives, is also another area companies need to heed in sustainability reporting.

A few key weaknesses in boards were also identified during the scoring process, including a lack of information on evaluations of board performance, as recommended under the Corporate Governance Code. “Where companies indicated that evaluation was conducted, in most cases, they did not give any details of matters such as how the evaluation was carried out and what qualities and functions were being assessed,” noted Mr. Patrick Rozario, Chairman of the Review Panel. 

The judges also found information on the process for the selection of directors, including executive directors (“EDs”) and independent non-executive directors (“INEDs”), and on the reasons for resignations, could be enhanced in most reports.  In the public sector, few organizations distinguish clearly between NEDs and INEDs or indicate criteria for directors’ independence. 

While generally there were improvements identified by the judges in the disclosure of the composition of boards and the background of directors, in terms of board diversity, not enough companies set clear policies and objectives and report on progress towards achieving them. 

In addition, in family businesses, in particular, investors could be given more information about the skillsets that newly-appointed family members can bring to the board. Also, succession planning is not discussed widely enough. Ensuring a smooth and transparent transition in leadership at the right time is important for investors to have trust and confidence in a company’s future prospects.

The tenure of directors on the board, particularly INEDs, the judges said, should not be indefinitely long. “Many companies with INEDs serving well over nine years did not provide any explanation of why they were still considered to be independent and should stay on the board. This is an area boards can work further on,” said Mr. Rozario.

List of Awardees

Judges' report

香港會計師公會「最佳企業管治大獎」表揚卓越管治
可持續發展及社會責任表現逐步提升

（香港，二零一九年十二月五日）香港會計師公會舉辦的「最佳企業管治大獎」今年踏入第20屆，評審團讚揚上市公司及公營機構多年來努力提升本港的企業管治質素，確保香港與國際標準看齊。儘管整體表現進步不少，鑒於《企業管治守則》及相關《上市規則》的修訂今年較早前生效，評審團鼓勵企業及機構提高董事會運作透明度、問責性及多元化。

本屆大會共頒發26個獎項，較往年多三個，數目更是歷屆之冠。大獎評審團察覺到可持續發展匯報的質素提升，而今年通過「可持續發展及社會責任報告獎」初步甄選的參選者數目是歷年新高，獲獎者亦有所增加。評審團喜見小市值公司及公營機構在可持續發展及社會責任方面的表現不斷進步。

香港會計師公會會長兼大獎評審團主席羅富源先生表示：「環球市場競爭激烈，為鞏固香港作為國際領先金融中心的聲譽，穩健的企業管治制度是不可或缺的一環。公會一向致力在本港推動及支援良好管治及可持續發展實務，確保香港與國際最佳實務同步前進。這亦有利維持投資者及公眾對香港資本市場前景的信心。」

多年來，普遍上市公司的企業管治架構、政策及實務亦日趨精密。《上市規則》的修訂、《上市規則》的《企業管治守則》及《環境、社會及管治報告指引》逐步提升，加上《公司條例》更新並引入企業管治規定，皆充分反映監管者、投資者以至公眾對企業的期望日高。羅先生說：「今年不同組別的得獎名單上亦有首次獲獎的機構，他們來自各行各業，成績令人欣喜。」

首次獲獎的機構包括瑞聲科技控股有限公司、中國廣核電力股份有限公司、維他奶國際集團有限公司、中國移動有限公司、朗詩綠色集團有限公司、渠務署、建造業議會及新創建集團有限公司（獎項詳情請參閱附錄）。

在評選得獎機構時，評審團注重自願披露水平是否優於最低法定及監管要求。大獎籌委會主席鄧苑儀女士說：「最佳企業管治大獎旨在為香港樹立最佳實務楷模，推動上市公司及公營機構建立良好管治。在評選時，評審團及遴選委員會考慮參選公司的整體管治表現，希望能找到展現深厚卓越管治文化的指標。我們亦會透過年報或可持續發展報告，評估有關投資者、公眾利益或其他事宜的透明度及披露範圍。」

鄧女士補充說：「今年大會頒出歷屆最多的獎項，然而表揚最優異管治水平的鑽石獎仍然懸空。評審團認為，市場對企業管治抱高期望已是大勢所趨，即使管治卓越的機構仍然有改進空間，評審團希望鼓勵企業及機構精益求精。」

「最佳企業管治大獎2019」得獎者由專家評審團選出。大會於初步甄選階段共審閱約500份年報及超過500份可持續發展報告，然後由遴選委員會對表現優異者就披露及實務方面作深入評估，得出各組別的入圍名單，再交由評審團選出得獎者。

有待改善之處

公會自推出「最佳企業管治大獎」以來，見證着企業及機構逐步建立良好的管治意識、認知以及有效的匯報，近年可持續發展匯報的表現更有長足進步。

就可持續發展而言，評審團留意到愈來愈機構為可持續發展報告尋求外間獨立認證，但評審團認為制訂清晰策略、目標及明確指標更為重要。機構亦應定期分析及探討達到目標的進度，在匯報可持續發展表現時，亦應平衡措施的正面及負面效益。

在評分過程中，評審團觀察到參選機構的董事會運作有待改善，包括沒有如《企業管治守則》所建議披露有關評估董事會表現的資料。大獎遴選委員會主席羅柏達先生說：「不少企業表示有定期評估董事會的表現，但大部分並沒有披露任何細節，例如如何評估、評估的準則及評估哪些職能等。」

評審團亦發現大部分報告披露的董事遴選程序資料（包括執行董事及獨立非執行董事）及辭任理由等未夠詳盡，且只有少數公營機構在報告中清晰列分非執董及獨立非執董或列明董事獨立性的劃分準則。

評審團認為普遍參選機構在董事會組成及董事背景披露方面有所進步，然而就董事會多元化上，不少公司未有訂立明確政策和目標以及匯報達標進度，表現有待改進。

此外，尤其是家族企業，應向投資者說明新委任的家族成員如何能為董事會注入新元素。另外，繼任規劃亦仍未成大氣候，企業要確保領導層在適當時候以具透明方式順利交接，方能贏得投資者的長遠信賴。

評審團認為董事會成員（尤其獨立非執董）的任期應設年限。羅柏達先生說：「許多企業的獨立非執董任期長逾九年之久，但沒有說明釐定獨立或予以留任的理據。這是企業應加以改進的範疇之一。」