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Independence of Directors

Updated: 02 Apr 2012
  • Independence is generally regarded as the key to fair and integrity. Given the unique nature of HKEX’s dual roles, the Independent Non-executive Directors (INEDs) serve the major purpose of striking a balance between public and corporate interests.  In addition, due to the complexity and breadth of the financial markets in which it operates, INEDs with diverse backgrounds bring wider spectrum of experience and broader views to the Board.
  • Since its listing, HKEX has been steering by a Board comprised by a majority of INEDs. The Chief Executive is the only Executive Director on the Board.
  • All INEDs are expressly identified as such in all HKEX’s corporate communications that disclose the Directors’ names.
  • In assessing the independence of a Non-executive Director, the SFC takes into account the criteria affecting independence as set out in Rule 3.13 of the Listing Rules. Every INED is required to confirm in writing to the SFC his/her independence upon his/her appointment as Director and to HKEX on an annual basis with reference to such criteria. Where an INED fails to meet any of such criteria, HKEX will disclose the reasons why such Director is still considered to be independent in the annual reports.
  • Each INED is also required to inform HKEX as soon as practicable if there is any change in his/her own personal particulars that may affect his/her independence.  Moreover, each has to declare his/her past or present financial or other interests in the Group’s business, or his/her connection with any of HKEX’s connected persons (as defined in the Listing Rules), if any.
  • The Nomination Committee is mandated to assess annually the independence of all INEDs and to affirm if each of them satisfies the criteria of independence as set out in the Listing Rules and is free from any relationships and circumstances which are likely to affect, or could appear to affect, their independent judgement. Every Nomination Committee member abstains from assessing his/her own independence.
  • The Board adopts the underlying principles of the CG Code regarding tenure of the Board, and seeks to strike an appropriate balance between continuity of experience and refreshment. Although serving on the Board for more than 9 years could be relevant to the determination of a Non-executive Director’s independence, the Board recognises that an individual’s independence cannot be determined arbitrarily on the basis of a set period of time. We consider that continued tenure brings considerable stability to the Board and the Board has benefited greatly from the presence of individuals who have over time gained valuable insight into the Group and its markets.
  • Rigorous review is applied to assessing the continuing independence of Directors having served for over 9 years, with attention to ensuring that they remain independent in character and judgement, and continue to present an objective and constructive challenge to the assumptions and viewpoints presented by the management and the Board. As candidates for election are proposed by separate resolutions put forward for shareholders’ consideration at general meetings, the circular to shareholders accompanying the resolution for electing an INED having served for more than 9 years will include the reasons why the Board believes he/she is still independent and should be re-elected.
  • Where the Board proposes a resolution to elect an individual as an Independent Non-executive Director at the general meeting, it will set out in the circular to shareholders and/or explanatory statement accompanying the notice of the relevant general meeting why it believes he/she should be elected and the reasons why it considers him/her to be independent.
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