New Hong Kong rules will create 1,300 board seats for women
AS a woman who sits on multiple boards of Hong Kong-listed companies, Susanna Chiu is a rarity in the city.
Despite efforts to improve gender diversity on corporate boards, many local companies still rely on old-boy networks to fill directorships, said Chiu, the first woman to be president of the Hong Kong Institute of Certified Public Accountants.
Chiu, 62, is a board member of cosmetics retailer Bonjour Holdings, where she is chief financial officer and a director at 4 other Hong Kong-listed companies.
"The female talent pool is here," she said. "You just need to open your eyes."
That's a message that more companies will need to accept, with new Hong Kong stock exchange rules creating more than 1,300 director positions exclusively for women by the end of 2024. The move follows a global trend toward more diverse boardrooms already well underway in places like Australia, the US and Europe.
Starting this month, the exchange requires any company seeking to list in Hong Kong to have at least one director of a different gender to the board majority. In January, the exchange set a 3-year deadline for every listed company, new or old, to ensure gender diversity on its board.
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The rule aligns with similar efforts globally. Securities Commission Malaysia last year updated its corporate governance code, saying that at least 30 per cent of directors should be female; companies that don't meet that target should disclose how they'll get there within 3 years. The European Union on Jun 7 reached a political agreement on a law to require listed companies to move toward 40 per cent female representation in non-executive director positions by 2026.
Among companies listed in Hong Kong, women hold about 16 per cent of board seats, according to the stock exchange. Blue chips do slightly better, with about 17 per cent for members of the benchmark Hang Seng Index in the second quarter of 2022, according to data compiled by Bloomberg News.
Frozen out
The changes could open up many new opportunities for women who until now have been largely frozen out of the financial hub's boardrooms, according to Nasrine Ghozali, chief risk officer of Oasis Management and member of the steering committee of the 30 per cent Club Hong Kong, which advocates for more gender diversity on boards.
"The new rules are creating some momentum for companies to finally consider diverse board candidates," she said. "For many years, Hong Kong has been lagging, globally and regionally, so it's great to see finally some progress."
Out of more than 2,500 companies listed on the exchange, 815 had no female directors at all, according to an April 2021 consultation paper from the Hong Kong bourse.
Those companies will need to find women to serve on their boards, Ghozali said, as will the 180 or so companies that typically list each year in Hong Kong.
That translates into more than 1,300 board seats for women, she said.
Untapped talent pools
So far, that hasn't generated much demand at the Hong Kong Independent Non-Executive Director Association, which keeps an active "talent pool" archive featuring gender and professional field filters, said president Roy Lo.
Companies tend to "tap the network of the major shareholder or the chairman", said Lo. "It needs to evolve."
Women held 4 more seats on the boards of companies in the Hang Seng Index in the second quarter from the previous three-month period, the biggest increase in 2 quarters, the data compiled by Bloomberg show. The average number of female directors was unchanged at 1.8, out of an average board size of 11.2.
- The percentage of female directorships increased to 16.5 per cent from 15.7 per cent. That's above the 14 per cent of women on boards of Nikkei 225 companies in Japan, and below the 35 per cent of women on boards of S&P/ASX 200 members in Australia, 32 per cent of the S&P 500 in the US and 39 per cent of the Stoxx 600 in Europe
- Five Hang Seng Index companies increased the number of women on their boards; the top companies by market capitalisation were China Mobile, Xinyi Solar Holdings and CSPC Pharmaceutical Group. China Mobile, Xinyi Solar and CSPC Pharma no longer have all-male boards
- Hang Seng Bank has the highest percentage of women on its board
- The information technology sector led the net gain in female board members, with one woman added to the boards at Xinyi Solar and Lenovo Group.
- Financials notched a net decline of one female director, with HSBC Holdings losing a female board member
- There are 8 HSI companies above the key threshold of 30 per cent female board membership. Seven companies, including Meituan, BYD and Xiaomi, do not have any female board members
- The Bloomberg Gender-Equality Index dropped 15 per cent in the second quarter, outperforming the MSCI World Index, which fell 16 per cent BLOOMBERG
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