As a pioneer of advocating best practices of these two topical areas, the Institute has conducted a board diversity research among the local listed companies, gauging a snapshot of the current status of boards in terms of certain key areas of diversity. The study covers 1,844 December-year-end listed companies in Hong Kong, focusing on their board size and diversity in terms of gender, age, and professional accounting qualifications, and the prevalence of long-serving directors.

Amongst other findings, the result shows that around 20% of the companies have a qualified accountant (“QA”) on the board who is an executive director (“ED”), i.e. a full-time employee. In other words, 80% of listed companies do not have a full-time accountant sitting on the board, despite the increasing complexity of financial and sustainability reporting. Most boards have a QA, but that person is likely to be an independent non-executive director (INED), or Non-Executive Director (NED). Given their part-time nature and the range of responsibilities that INEDs need to take up, and their generally low level of remuneration, there could potentially be an expectation gap as to their level of contribution to the preparation of the financial statements and sustainability reports.

In the past, there was a requirement specifying that under the Listing Rules, both the Main Board and the Growth Enterprise Market, to have a QA as a member of the senior management and preferably on the board, but such the requirement was removed in 2009. At the time, there was concern about this decision due to its potentially negative impact on overall CG.

“With continuous advancements in international sustainability standards and the need for businesses to price in sustainability-related risks and opportunities, among other things, the situation is likely to become increasingly high risk,” explains Loretta Fong CPA, HKICPA President and chair of the judging panel of the Institute’s Awards. “The company needs senior in-house expertise to take up the role. Therefore, the HKICPA would urge the government and regulators to consider introducing a requirement for a QA under the Listing Rules, similar to the previous requirement”, Fong adds.

On top of the above, results show that female board members accounted for only 14.3% of all directors, which is well below of the international benchmark of 30%. In fact, more than 30% of the companies in the study had no women at all on their boards.

“With single gender boards being required to appoint a director of a different gender no later than 31 December 2024, and no new listings of companies with single gender boards after July 2022, the Institute expects the percentage of the female board members to rise in the coming few years,” says Patrick Rozario, Chairman of the HKICPA’s Awards Review Panel. “Nevertheless, it is likely to stay below 20%, given the slow pace of change generally in appointing women on boards in Hong Kong,”

Loren Tang, Chairman of the Awards’ Organizing Committee, said the advantage of women being included in board discussions and decisions is the development of greater sensitivity to other stakeholders, in addition to equity investors.