Corporate Governance Issues in Hong Kong

Abstract

This paper considers the impact and effectiveness of recent company law reform in Hong Kong in relation to corporate governance, particularly with regard to minority shareholders. It makes suggestions as to the appropriate direction for future law reform relating to minority shareholders rights and remedies, for the promoting of better corporate governance.

There has recently been extensive work done relating to the reform of various aspects of Hong Kong Company Law. The Companies Bill 2011 was gazetted in January 2011. There have also been numerous law reform papers written pursuant to the Rewrite of the Companies Ordinance project, the most recent document being published in October 2010.

This paper considers the extent to which aspects of the recent company law reform in Hong Kong have been successful in ensuring that Hong Kong’s corporate governance regime relating to minority shareholders is in line with international norms and practices.

A comparative approach will be adopted. Recent corporate goveranance developments and proposals by academics and law reform committees in other common law countries will be considered.

Recent cases applying the provisions in the Companies Ordinance relating to the statutory derivative action will be discussed. The recent amendments to the statutory derivative action in Hong Kong will be explored. The related question of whether the common law derivative action should be retained in Hong Kong will also be discussed, together with general comments relating to the divergence in Company Law between Hong Kong and the UK.