New Hong Kong rules will create 1,300 board seats for women by end-2024

This means any company seeking to list in Hong Kong require at least one director of another gender to the board majority. PHOTO: REUTERS

HONG KONG (BLOOMBERG) - As a woman who sits on multiple boards of Hong Kong-listed companies, Ms 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 Ms Chiu, the first woman to be president of the Hong Kong Institute of Certified Public Accountants.

Ms Chiu, 62, is a board member of cosmetics retailer Bonjour Holdings, where she is chief financial officer, and a director at four other Hong Kong-listed companies.

"The female talent pool is here," she said. "You just need to open your eyes."

That is 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 towards more diverse boardrooms already well under way in places like Australia, the United States 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 three-year deadline for every listed company, new or old, to ensure gender diversity on its board.

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 do not meet that target should disclose how they will get there within three years.

The European Union on June 7 reached a political agreement on a law to require listed companies to move towards 40 per cent female representation in non-executive director positions by 2026.

In Singapore, women directors among the 100 largest listed companies rose to 19.7 per cent at the start of this year - up from 17.6 per cent at end-2020 and just shy of the target of 20 per cent set by the Council for Board Diversity.

The Council has also set a target of 25 per cent of women's participation on boards by the end of 2025, and 30 per cent by end-2030.

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 this year, 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 Ms 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.

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, Ms 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.

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