There are formal, considered and transparent procedures for nominating candidates to stand for election as Directors. The process of evaluating the skills and composition of the Board is ongoing and is kept under regular review in order to ensure that appropriate plans for succession to the Board are in place for smooth Board refreshment, and that the Board retains its effectiveness at all times. Directors are subject to re-election/re-appointment at regular intervals. Directors will be provided with an appointment letter which sets out the terms and conditions of their appointment, upon their appointment. HKEX will explain the reasons for the resignation or removal of any Director.
Appointment and election of Directors
- Elected Directors – Shareholders may by ordinary resolution elect any person to be an Elected Director, but the total number of Directors elected shall, according to Article 88(1) of the Articles of Association, not at any time exceed 6. Candidates for election are proposed by separate resolutions put forward for shareholders’ consideration at general meetings.
- According to Article 88(3) of the Articles of Association, no person (other than a Director retiring in accordance with the Articles of Association) shall be appointed or re-appointed as an Elected Director at any general meeting unless the candidate (a) is recommended by the Directors; or (b) is nominated by notice in writing by a shareholder within the seven-day period commencing the day after the despatch of the notice of the meeting (or such other period, being a period of not less than 7 days, commencing no earlier than the day after the despatch of the notice of such meeting and ending no later than 7 days prior to the date appointed for such meeting, as may be determined by the Directors from time to time). The notice of nomination shall be accompanied by a notice signed by the candidate indicating his/her willingness to be appointed or re-appointed.
- The Nomination and Governance Committee is mandated to review the structure, size and diversity of the Board annually, and to identify and, in accordance with the Board Nomination Policy and the Board Diversity Policy, nominate suitable candidates for the Board’s consideration and recommendation to shareholders for consideration. In the selection process, the Nomination and Governance Committee, while adopting HKEX’s Equal Opportunities Policy, makes reference to criteria including, inter alia:
- reputation for integrity, accomplishment and experience in the financial services sector, in particular, in the securities, commodities and futures markets and the clearing business
- potential time commitment for the Board/committee responsibilities
- diversity in all its aspects, including but not limited to gender, age, cultural and educational background, ethnicity, professional experience, skills, knowledge and length of service
- To further enhance Board diversity and strike an appropriate balance between continuity of experience and refreshment of the Board, the Board sets a maximum tenure of 12 consecutive years for the Non-executive Directors to be eligible for nomination by the Board to stand for re-election by shareholders.
- As a good corporate governance practice, every Director/Nomination and Governance Committee member abstains from voting on the proposition of himself/herself for election by shareholders.
- To enable shareholders to make an informed decision on their election at a general meeting, the names of all candidates submitted for election or re-election as a Director together with his/her biographical details as set out in Rule 13.51(2) of the Listing Rules (including other directorships held in listed public companies in the past 3 years and other major appointments) are set out in a circular to be sent to shareholders prior to the meeting.
- Government Appointed Directors – Pursuant to Section 77 of the SFO (Chapter 571 of the Laws of Hong Kong) and Article 88(4) of the Articles of Association, the Financial Secretary of Hong Kong may appoint any person as a Director but the number of such appointed Directors shall not exceed the number of Elected Director. The Government Appointed Directors are not subject to shareholders’ election or re-election.
- Chairman – According to Article 109(2) of the Articles of Association, the Chairman shall be a Non-executive Director appointed by the Board, and whose appointment is, pursuant to Section 69 of the SFO (Chapter 571 of the Laws of Hong Kong), subject to the approval of the Chief Executive of Hong Kong. The Chairman may be re-appointed for a further period or periods up to a maximum of 6 consecutive years.
- Chief Executive (ex-officio Board member) – The Chief Executive’s appointment is recommended by a Selection Committee (an ad hoc committee established for the particular purpose) for the Board’s approval and is, pursuant to Section 70 of the SFO (Chapter 571 of the Laws of Hong Kong), subject to the SFC’s approval. The Chief Executive is not subject to shareholders’ election or re-election.
- Directors appointed to fill casual vacancy – If a casual vacancy arises in the office of an Elected Director, the Board may make an appointment to the office according to Article 90 of the Articles of Association.
Term of office
- According to Articles 88(2) and 88(4) of the Articles of Association, the term of office of Non-executive Directors is not more than 3 years, but each Government Appointed Director is normally appointed for a term of approximately 2 years. Pursuant to Articles 88(4) and 91(2) of the Articles of Association, retiring Non-executive Directors are eligible for re-appointment or re-election.
- The staggered Board structure allows for regular evaluation of the mix of skills and experience of the Board, as required, and enables the Board to change its composition in an orderly manner over time while maintaining leadership stability and continuity.
- According to Article 88(5) of the Articles of Association, the term of service of the Chief Executive who is an ex-officio Director, on the Board is subject to his employment contract with HKEX. He shall retire upon termination of his employment as the Chief Executive but be eligible for re-appointment.
- A Director appointed by the Board to fill casual vacancy should be subject to election by shareholders at the first general meeting of HKEX after such Director’s appointment.
Removal of Directors
- The Financial Secretary of Hong Kong may remove any Government Appointed Director in accordance with Section 77 of the SFO (Chapter 571 of the Laws of Hong Kong), and an Elected Director may be removed before his/her term of office has expired in accordance with Articles 92(1) and 92(2) of the Articles of Association.