HKEX Launches Listing Operation Governance Committee to Monitor Internal Process

Hong Kong Exchanges and Clearing Limited (HKEX) [0388:HK] founded a new sub-committee named Listing Operation Governance Committee on June 16 to enhance its board’s supervision over the operation and management of HKEX’s Listing Division, as reported by Caixin on the same day. The new committee will exercise its oversight to ensure the Listing Division takes the statutory duties as the front-line regulator of equity issuers in an independent, prudent, and competent manner. According to the latest announcement, CHOW WOO Mo Fong, LEUNG Pak Hon, and YIU Kin Wah joined the committee with CHOW WOO Mo Fong as the chairwoman. HKEX has yet to confirm the remaining two members of the committee.

HKEX, Hong Kong Securities and Futures Commission (SFC), and the Hong Kong SAR Government serve as three progressive regulatory tiers for listing in the city. In the past years, HKEX was criticized for the inappropriate process of internal control and bribe scandals. For instance, in March 2020, the former senior executive of HKEX’s Listing Division, Yeoh Kim Loong, was sued for misconduct in public office and the HKD9.15m (around RMB8.24m) graft when he was the joint leader of the IPO vetting team between 2017 and 2019. As his initial advice on IPO review and approval would directly affect the final decision, his misconduct broke the listing rules and damaged the interests of other companies and investors.

Last July, SFC reported that the Listing Division lacked staff training on conflict of interest arising from listing process, and the internal control rules were vague to follow. The authority also pointed out that the Listing Division attended several meetings that HKEX’s other operational and functional departments initiated with listing candidates. Such behaviors might leave an unethical image to the public, where the Division assisted HKEX’s other departments to acquire clients. Following that, HKEX required the Listing Division to report monthly on different areas of its regulatory and operational activities, including annual work plans, human resources and training, staff misconduct issues or incidents, analysis on IPO vetting and up-to-date regulation, and the major projects in process. As a further step of internal monitoring, the Listing Operation Governance Committee will receive and discuss any issues arising from monthly reports from Listing Division.

Sources:

https://finance.caixin.com/2021-06-17/101728419.html

https://finance.caixin.com/2020-03-25/101533899.html

https://finance.caixin.com/m/2020-07-04/101575493.html

https://www.hkexgroup.com/-/media/HKEX-Group-Site/ssd/Org/terms_ref/documents/LOGC_tor.pdf