About the authors
Written by Mathilde Chator · Solicitor at Slotine. Mathilde advises on corporate governance, board practices, and listed-company compliance.
Reviewed by Maeva Slotine · Founder and Solicitor at Slotine. Maeva oversees the firm’s corporate governance and compliance practice.
KEY TAKEAWAYS
The CG Code applies to all HKEX-listed companies on a comply-or-explain basis. Significant 2025 amendments strengthen board evaluation, skills disclosure and risk management requirements.
- The CG Code applies to all HKEX Main Board and GEM listed companies on a ‘comply or explain’ basis
- 2025 amendments: board performance evaluation, board skills matrix, Lead INED, upgraded RMIC disclosure
- Non-compliance carries real consequences: reputational damage, regulatory scrutiny and shareholder pressure
- Slotine advises private companies on governance using the CG Code as a reference
What Is the Corporate Governance Code?
The Corporate Governance Code (CG Code) is the principal governance framework for companies listed on the Stock Exchange of Hong Kong Limited (HKEX). It is published by HKEX under the Listing Rules and applies to all Main Board and GEM listed issuers.
The CG Code sets out the governance standards that listed companies are expected to meet. It is structured in three tiers:
Mandatory Disclosure Requirements (MDRs): obligatory requirements that listed issuers must comply with and disclose. Failure to comply is a breach of the Listing Rules.
Code Provisions (CPs): provisions that issuers are expected to follow on a ‘comply or explain’ basis. Where an issuer deviates from a CP, it must explain the deviation in its annual Corporate Governance Report.
Recommended Best Practices (RBPs): guidance that issuers are encouraged to adopt but are not required to follow or explain.
The CG Code covers board composition and independence, director responsibilities, board committees (audit, remuneration, nomination), risk management and internal controls, transparency and disclosure, and shareholder relations. It is revised periodically by HKEX to reflect evolving governance standards and market expectations.
The 2025 Amendments: What Has Changed
The most significant revision to the CG Code in recent years took effect on 1 July 2025, following HKEX’s consultation conclusions published in December 2024. The amendments aim to strengthen board effectiveness, improve risk oversight and bring Hong Kong’s governance standards further into line with international best practice.
| Area | What Changes | Effective Date |
|---|---|---|
| Lead Independent Non-Executive Director | New recommended best practice to appoint a Lead INED with defined communication responsibilities between INEDs, the board and minority shareholders | 1 July 2025 |
| Board Performance Evaluation | New Code Provision: boards must conduct and disclose a formal performance review at least every two years, covering composition, skills, risk management and stakeholder engagement | 1 July 2025 |
| Board Skills Matrix | New Code Provision: boards must publish a skills matrix showing collective experience, skills and qualifications linked to the issuer’s strategy and diversity targets | 1 July 2025 |
| Nomination Committee: Directors’ Time Commitment | New mandatory disclosure: the nomination committee must conduct and disclose an annual assessment of each director’s time commitment and contribution | 1 July 2025 |
| Risk Management and Internal Controls (RMIC) | Upgraded from Code Provision to Mandatory Disclosure Requirement: annual review of RMIC system effectiveness must be disclosed in the CG Report | 1 July 2025 |
| Transitional Arrangements | Certain new requirements have phased implementation periods; issuers should confirm applicable transition dates with their legal advisers | Phased from 1 July 2025 |
Practical Note: Phased Implementation
Not all 2025 amendments have the same effective date. HKEX provided transitional arrangements for certain requirements to give issuers time to adapt. Listed companies should map each new requirement against their own reporting calendar and confirm the applicable transition arrangements with their legal advisers before the relevant reporting period.
Key Requirements in Detail
Lead Independent Non-Executive Director
The 2025 CG Code introduces a Recommended Best Practice for listed issuers to appoint a Lead Independent Non-Executive Director (Lead INED). The Lead INED is intended to serve as a communication bridge: between INEDs as a group, between INEDs and the rest of the board, and between the board and shareholders, in particular minority shareholders.
HKEX’s guidance identifies concrete functions for the Lead INED: facilitating INED-only sessions, acting as a conduit for shareholder concerns that cannot appropriately be raised through the chair, and interacting with the investor relations function. Practical considerations for boards include how to select the Lead INED, whether to impose a tenure limit on the role, and how to structure remuneration for the additional responsibilities.
While this remains an RBP rather than a CP, the practical expectation is that issuers with complex ownership structures or significant minority shareholder populations will be under increasing pressure to explain non-adoption.
Board Performance Evaluation
The 2025 amendments introduce a new Code Provision requiring boards to conduct and publicly disclose a formal board performance review at least every two years. Previously, performance evaluation was a recommended practice with minimal disclosure obligations.
The review must cover a non-exhaustive list of areas: board composition and skills, board culture and practices, quality and timeliness of information provided to the board, training and compliance, risk management and internal controls, and stakeholder engagement. The CG Report must disclose the scope, mode, methodology and findings of the review, including any identified areas for improvement and the measures planned to address them.
For listed company directors, this is a meaningful change. Boards that have conducted only informal self-assessments will need to establish a structured process, define evaluation criteria, and build a disclosure framework that satisfies the CP.
Board Skills Matrix
The board skills matrix is a new Code Provision requiring issuers to publish a matrix showing the collective experience, skills, qualifications and expertise of the board. The emphasis is on collective capability, not individual directors’ CVs. The matrix must connect the board’s skill set to the issuer’s long-term strategy, particular goals and diversity targets.
HKEX’s guidance identifies suggested areas for the matrix: strategy, leadership, industry knowledge, financial literacy and business acumen, risk management and compliance, diversity, and emerging topics including artificial intelligence. There is no prescribed format, but the disclosure must be meaningful: it must show the existing skills mix, explain how that combination serves the issuer’s purpose and strategy, and set out any plans to acquire further skills.
For boards with concentrated ownership or long-serving director pools, the skills matrix exercise may surface gaps that require attention before the first required disclosure.
Nomination Committee: Directors’ Time Commitment
The nomination committee is now required to conduct and disclose an annual assessment of each director’s time commitment and contribution to the board. This is a new Mandatory Disclosure Requirement, carrying a higher compliance obligation than a Code Provision.
The CG Report must disclose the process and criteria used for the assessment and state whether the nomination committee considers each director’s time commitment and contribution to be adequate. Assessment criteria suggested by HKEX include the director’s involvement on the board, their familiarity with the issuer’s business, attendance at meetings and quality of contributions.
For directors who hold multiple board seats or have significant external commitments, this requirement introduces a formal accountability mechanism that previously existed only in practice norms.
Risk Management and Internal Controls
The requirement for an annual review of the effectiveness of risk management and internal control (RMIC) systems has been upgraded from a Code Provision to a Mandatory Disclosure Requirement. This is one of the most significant structural changes in the 2025 amendments.
The board, management and audit committee each have defined roles. The board is responsible for maintaining and reviewing RMIC systems; management is responsible for their day-to-day operation; and the audit committee assists the board in its oversight responsibilities. The annual review must cover five main components: corporate culture and control environment; risk assessment; internal controls; information and communication systems; and monitoring activities.
The disclosure in the CG Report must address the scope of the review, the methodology applied, and the board’s confirmation of the systems’ effectiveness. Where significant deficiencies are identified, the board must explain the remediation steps taken or planned.
The ‘Comply or Explain’ Framework in Practice
The comply-or-explain structure gives listed companies flexibility in how they meet the CG Code standards, but it does not give them a free pass on non-compliance. An explanation for deviation must be substantive and specific to the issuer’s circumstances. Generic explanations such as ‘the board considers that existing arrangements are adequate’ are unlikely to satisfy institutional shareholders, proxy advisers or HKEX.
The quality of CG disclosures is scrutinised not only by HKEX but increasingly by institutional investors and proxy advisory firms such as ISS (Institutional Shareholder Services) and Glass Lewis. For companies seeking to attract or retain international institutional shareholders, robust governance disclosure has become a commercial as well as a compliance matter.
Important: Who Does the CG Code Apply To?
The CG Code applies to all issuers with a primary listing on the Main Board or GEM of the Stock Exchange of Hong Kong. It does not apply to companies with a secondary listing in Hong Kong. Foreign private issuers listed in Hong Kong under Chapter 19C (Overseas Issuers) are subject to modified requirements. The specific obligations applicable to a company’s listing status and place of incorporation should be confirmed with legal counsel.
Consequences of Non-Compliance
A breach of a Mandatory Disclosure Requirement is a breach of the Listing Rules and may result in HKEX taking regulatory action: private or public censure, requiring a remedy, or, in serious cases, referring the matter to the SFC. For Code Provisions, the consequence of unexplained deviation is primarily reputational and investor-facing, but persistent non-compliance can attract HKEX’s attention.
Director liability is a further consideration. Directors may face personal liability for breach of statutory provisions; however, they will generally not be personally liable for shareholder loss unless they have acted fraudulently and the company has been wound up pursuant to a winding-up order appointing a liquidator. The CG Code’s requirements on RMIC, board oversight and nomination committee processes are directly relevant to directors’ standard of care obligations under Hong Kong law.
Need governance advice?
If you are reviewing your governance framework or facing a specific compliance challenge, our team can help.
Slotine Corporate Governance Experience
Slotine’s corporate governance advice is broadly embedded across mandates rather than limited to listed company compliance. Our experience is primarily anchored in private company contexts, advising on governance structuring in the course of M&A transactions, as well as providing ongoing counsel to clients with institutional investors or private equity sponsors on their board. In those relationships, governance considerations arise naturally and recurrently, whether in connection with board composition, investor rights, or decision-making processes.
Our practice is focused on private companies, where governance challenges are often a direct reflection of the maturity of the owners and management team. Unlike listed companies, which operate within frameworks grounded in international best practices, private companies have considerably more freedom, including, at times, the freedom to remain complacent until challenged by incoming or existing investors. It is precisely at those inflection points that sound governance advice matters most. We regularly advise clients backed by institutional investors and private equity sponsors, where board dynamics, investor rights, and decision-making frameworks require bespoke structuring rather than a tick-box approach. Our view is that the right governance framework is not a constraint, it is a value driver for all parties.
We regularly advise directors individually on their personal obligations, including statutory duties, fiduciary duties, and potential liability exposure. This typically arises at two moments: at the point of appointment, particularly where directors are not familiar with Hong Kong companies law and need a clear picture of what their role entails, and in specific, high-stakes situations where personal liability becomes acutely relevant, such as decisions involving the disposal of significant assets, material transformation of the business, or solvency concerns.
The governance challenge we encounter most frequently is one that is equally relevant across company types: ensuring that each board member has the information necessary to make an informed decision, and anticipating how directors with different backgrounds will engage with that information. Board members who have served in other jurisdictions often bring assumptions grounded in their home market, which can create friction or hesitation when Hong Kong law operates differently. Navigating that dynamic, bridging the gap between commercial rationale, legal framework, and the varying reference points of directors drawing on experience from other jurisdictions, is something we do regularly, and it is directly transferable to the listed company context.
How Slotine Can Help
Slotine advises private companies, their boards and individual directors on corporate governance matters, with a focus on bespoke structuring rather than formulaic compliance. Our corporate governance practice covers: advising directors on their statutory, fiduciary and personal obligations, including at appointment and in high-stakes decision-making situations; structuring board composition, investor rights and decision-making frameworks in the context of M&A transactions and ongoing investor relationships; and bridging the gap between commercial rationale, legal requirements and the varying perspectives of directors drawing on experience across jurisdictions.
While our practice is anchored in the private company space, the governance principles we work with daily, board accountability, conflicts of interest, informed decision-making and director liability, are directly relevant to listed company requirements, including under the Corporate Governance Code and the Listing Rules. We would be pleased to discuss how our experience can be brought to bear on your governance needs.
Frequently asked questions about the Corporate Governance Code
For the statutory procedure governing removal of directors by shareholders, see our dedicated guide.