HKMA issues guidance on empowerment of independent non-executive directors of Hong Kong-incorporated authorised institutions

In its recent circular, the Hong Kong Monetary Authority provided further guidance on the empowerment of independent non-executive directors (INEDs) in the banking industry in Hong Kong, following an industry consultation carried out in early 2016.  The guidance examines, amongst other things:

• the role of INEDs;
• the expected practices of locally incorporated authorised institutions (HK-Incorporated AIs) with regard to INEDs; and
• proposed measures to be taken by HK-Incorporated AIs to ensure that there are sufficient suitably qualified people willing to serve as INEDs on the boards of HK-Incorporated AIs.

HK-Incorporated AIs are expected to implement the new measures by 14 December 2017.  The detailed guidance covers the following six areas:

1. Constituting the board and its committees
2. Roles, qualities and time commitment
3. Independence and tenure
4. Remuneration
5. Board practices
6. Training and development requirements

The circular is intended to regulate practices of HK-Incorporated AIs in relation to INEDs only, but some of the guidelines set out therein will serve as a helpful reference guide to AIs incorporated outside of Hong Kong.

Please click here to read our briefing on the key requirements set out in the circular.  If you wish to discuss this further, please do not hesitate to contact William Hallatt, Hannah Cassidy, Rebecca Hui or your usual Herbert Smith Freehills contact.