On March 13, partners Stephanie Chan and Claudia Yu of Sidley’s Hong Kong office were invited to speak at an engaging hybrid event, hosted by the Hong Kong Chartered Governance Institute (HKCGI), on “SFC Enforcement Insights: Independent Non-Executive Directors’ (INEDs) Roles and Responsibilities”. The hybrid seminar attracted more than 400 online and in-person attendees, including HKCGI members, directors and governance professionals of listed issuers, as well as legal and other professionals. Charles Chan and Joanna Lee, Director of the Enforcement Division of the Securities and Futures Commission (SFC), and Kenneth Chan, Senior Vice President, Listing Regulation and Enforcement, Listing Division from Hong Kong Exchanges and Clearing Limited (HKEX) also joined the event to share insights and advice from the regulators’ perspectives.
Stephanie highlighted the regulatory expectations on INEDs and the critical role they play in promoting best practices in corporate governance, particularly in supervising management, overseeing the listed issuer’s financial reporting and performance, managing risks and ensuring regulatory compliance to protect shareholders' interests. She explained the common misconceptions and pitfalls for INEDs in details and shared some practical tips for INEDs to ensure regulatory compliance. Claudia shared her observations on common practical challenges faced by INEDs in performing their duties and elaborated on some good practices for INEDs from the regulatory compliance perspective.
The panel discussion, moderated by Robin Healy FCG HKFCG, Council Member of HKCGI and Director – Company Secretariat of Link REIT, focused on the regulatory expectations regarding the evolving role of INEDs under the prevailing regulatory landscape. The panelists shared their insights on the duties and obligations of INEDs and provided some practical tips on how to best manage the associated regulatory risks and ensure that both listed issuers and INEDs are well-positioned to safeguard the interest of their companies, investors, and the wider Hong Kong capital markets. Discussions surrounded some hot topics, including red flags commonly overlooked by INEDs that may lead to enforcement actions; the key lessons from the SFC’s recent enforcement actions; INEDs’ responsibilities compared to executive directors; the role of INEDs when handing SFC investigations and joint enforcement actions involving other regulators; and suggestions on how to handle settlement discussions with regulators.
HKCGI, formerly known as The Hong Kong Institute of Chartered Secretaries (HKICS), is the only qualifier of the internationally recognized Chartered Secretary and Chartered Governance Professional qualification in the Chinese mainland and Hong Kong. HKCGI currently has over 10,000 members, including graduates and students with significant representations within listed issuers and other cross-industry governance functions.
