Introduction
The Stock Exchange of Hong Kong Limited (HKEx) has introduced sweeping amendments to the Corporate Governance Code (CG Code) and Listing Rules, effective from July 1, 2025, with phased compliance deadlines extending to 2031. These changes demand immediate action from boards of HKEx-listed companies to align governance frameworks, enhance disclosures, and mitigate risks of reputational damage, investor distrust, or regulatory penalties. This guide outlines critical updates and a strategic preparation plan for compliance.
Critical Changes Requiring Immediate Action
The revised CG Code transforms several “comply or explain” provisions into mandatory disclosures, emphasizing transparency and accountability. Below are the critical changes requiring urgent board attention, optimized for HKEx corporate governance compliance in 2025.
Focus area | Key requirements | Compliance | Effective date |
A. Board Composition and Effectiveness | |||
Appointment of Lead INED if board chair is not independent | Encouraged to enhance board communication and shareholder engagement | RBP | Ongoing |
Mandatory disclosure of shareholder engagement | Disclose number, nature and frequency of engagements, and follow-up actions in the CG report | CP / MDR | 1 Jul 2025 |
Maintain and disclose a board skills matrix | Maintain and disclose a board skills matrix in the CG report, including enhanced disclosure of the board’s skillset | CP | 1 Jul 2025 |
Board performance review | Require a board performance review at least every two years, and disclose timing and outcome summary in the CG report | CP | 1 Jul 2025 |
Nomination committee diversity (gender) | At least one director of a different gender on the nomination committee | CP | 1 Jul 2025 |
B. Director Independence and Tenure | |||
Long-serving INEDs | An INED will no longer be considered independent after serving as an INED for a company for nine years The INED may become an INED again after a three-year “cooling-off” period. | Rule | Subject to phased implementation over a transition period of six years as follows: Phase 1: by the first AGM on or after 1 July 2028, long-serving INEDs must not represent a majority of INEDs on a company’s board. Phase 2: by the first AGM on or after 1 July 2031, companies must not have any long-serving INEDs. |
C. Overboarding and Time Commitment | |||
INEDs capped at 6 HK-listed directorships | An INED must not hold more than six listed issuer directorships, with a three-year transition period | Rule | IPO applicants: 1 Jul 2025 Others: 1 Jul 2028 |
Directors’ time commitment assessment | Nomination committee should annually assess and disclose each director’s time commitment and contribution. | MDR | 1 Jul 2025 |
D. Training and Development | |||
Annual mandatory continuous professional development training (CPD) for all directors | CPD must cover governance, duties, ESG, risk management, internal controls and business trends | Rule | 1 Jul 2025 |
24-hour CPD for first-time HKEx directors | First-time directors are required to complete a minimum of 24 hours of CPD within 18 months of their appointment First-time directors, who have served as director of a company listed on an exchange other than HKEX within the three years prior to their appointment, are required to complete 12 hours of CPD | Rule | Appointments on or after 1 Jul 2025 |
CPD disclosures for each director | Disclose in the CG report: hours, topics, format or mode of CPD and provider details | MDR | 1 Jul 2025 |
E. Diversity and Inclusion | |||
Workforce diversity policy | Must have a workforce diversity policy and disclose the policy in the CG report | Rule / MDR | 1 Jul 2025 |
Gender ratio disclosures | Disclose in the CG report the gender ratios of senior management and workforce | MDR | 1 Jul 2025 |
Board diversity policy | Must have a board diversity policy and disclose the policy in the CG report | Rule / MDR | 1 Jul 2025 |
Annual disclosure on implementation of board diversity policy | Disclose the results of its annual review of the implementation of its board diversity policy in the CG report | MDR | 1 Jul 2025 |
F. Risk and Internal Controls | |||
Annual board review of risk management and internal controls systems | Must conduct an annual review of the issuer’s risk management and internal controls and disclose details in the CG report including the board confirmation of effectiveness | MDR | 1 Jul 2025 |
G. Dividend Policy | |||
Enhanced dividend-related disclosures | Disclose rationale for changes in rate or absence of distribution | MDR | 1 Jul 2025 |
H. Other Governance Enhancements | |||
Record dates to be published 10 business days prior | The record date and any related book closure date for general meetings and for receiving entitlements must be announced 10 business days in advance | Rule | 1 Jul 2025 |
Monthly management updates to board | Should include monthly management accounts and management updates | CP | 1 Jul 2025 |
Focus area | Key requirements | Compliance | Effective date |
A. Board Composition and Effectiveness | |||
Appointment of Lead INED if board chair is not independent | Encouraged to enhance board communication and shareholder engagement | RBP | Ongoing |
Mandatory disclosure of shareholder engagement | Disclose number, nature and frequency of engagements, and follow-up actions in the CG report | CP / MDR | 1 Jul 2025 1 Jul 2025 |
Maintain and disclose a board skills matrix | Maintain and disclose a board skills matrix in the CG report, including enhanced disclosure of the board’s skillset | CP | |
Board performance review | Require a board performance review at least every two years, and disclose timing and outcome summary in the CG report | CP | 1 Jul 2025 |
Nomination committee diversity (gender) | At least one director of a different gender on the nomination committee | CP | 1 Jul 2025 |
B. Director Independence and Tenure | |||
Long-serving INEDs | An INED will no longer be considered independent after serving as an INED for a company for nine years The INED may become an INED again after a three-year “cooling-off” period. | Rule | Subject to phased implementation over a transition period of six years as follows: Phase 1: by the first AGM on or after 1 July 2028, long-serving INEDs must not represent a majority of INEDs on a company’s board. Phase 2: by the first AGM on or after 1 July 2031, companies must not have any long-serving INEDs. |
C. Overboarding and Time Commitment | |||
INEDs capped at 6 HK-listed directorships | An INED must not hold more than six listed issuer directorships, with a three-year transition period | Rule | IPO applicants: 1 Jul 2025 Others: 1 Jul 2028 |
Directors’ time commitment assessment | Nomination committee should annually assess and disclose each director’s time commitment and contribution. | MDR | 1 Jul 2025 |
D. Training and Development | |||
Annual mandatory continuous professional development training (CPD) for all directors | CPD must cover governance, duties, ESG, risk management, internal controls and business trends | Rule | 1 Jul 2025 |
24-hour CPD for first-time HKEx directors | First-time directors are required to complete a minimum of 24 hours of CPD within 18 months of their appointment First-time directors, who have served as director of a company listed on an exchange other than HKEX within the three years prior to their appointment, are required to complete 12 hours of CPD | Rule | Appointments on or after 1 Jul 2025 |
CPD disclosures for each director | Disclose in the CG report: hours, topics, format or mode of CPD and provider details | MDR | 1 Jul 2025 |
E. Diversity and Inclusion | |||
Workforce diversity policy | Must have a workforce diversity policy and disclose the policy in the CG report | Rule / MDR | 1 Jul 2025 |
Gender ratio disclosures | Disclose in the CG report the gender ratios of senior management and workforce | MDR | 1 Jul 2025 |
Board diversity policy | Must have a board diversity policy and disclose the policy in the CG report | Rule / MDR | 1 Jul 2025 |
Annual disclosure on implementation of board diversity policy | Disclose the results of its annual review of the implementation of its board diversity policy in the CG report | MDR | 1 Jul 2025 |
F. Risk and Internal Controls | |||
Annual board review of risk management and internal controls systems | Must conduct an annual review of the issuer’s risk management and internal controls and disclose details in the CG report including the board confirmation of effectiveness | MDR | 1 Jul 2025 |
G. Dividend Policy | |||
Enhanced dividend-related disclosures | Disclose rationale for changes in rate or absence of distribution | MDR | 1 Jul 2025 |
H. Other Governance Enhancements | |||
Record dates to be published 10 business days prior | The record date and any related book closure date for general meetings and for receiving entitlements must be announced 10 business days in advance | Rule | 1 Jul 2025 |
Monthly management updates to board | Should include monthly management accounts and management updates | CP | 1 Jul 2025 |
Rule: Main Board Listing Rules and GEM Listing Rules
CP: Code Provisions under the CG Code which an issue shall “comply or explain” under the CG Code
MDR: Mandatory Disclosure Requirements under the CG Code which an issuer shall disclose in its annual corporate governance report
RBP: Recommended Best Practices under the CG Code
Your 6-Step Preparation Plan
1. Audit the board composition and tenure
- Map out the tenure of all INEDs against the 9-year limit
- Identify long-serving INEDs and schedule succession plans ahead of the 2028 and 2031 deadlines
- Evaluate gender composition of the board and nomination committee
- Ensure no existing INED holds more than six HK-listed directorships (especially post-2028)
2. Overhaul training and documentation
- Create an annual training calendar covering HKEx requirements, ESG, risk management and legal updates
- Use tools to track CPD hours and obtain certifications from internal or external providers
- For first-time directors, ensure training is completed within the required timeframe (12 or 24 hours)
3. Redesign policies and charters
- Review and amend:
- Nomination committee terms of reference to reflect gender diversity requirements
- Board diversity and workforce diversity policies
- Risk management and internal control policies
- Dividend policy with explanatory frameworks
- Implement board performance review procedures (including peer reviews or third-party assessments)
4. Prepare disclosure frameworks and templates
- Draft revised CG report templates to include:
- Board skills matrix
- CPD records
- Shareholder engagement outcomes
- Risk and internal control review results
- Diversity metrics and policy assessments
- Dividend rationale and consistency disclosures
5. Plan and document shareholder engagement activities
- Schedule engagement meetings with shareholders at least annually
- Record and report on the format, frequency, attendees, and follow-up from these engagements
- Consider whether the appointment of a Lead INED could enhance communication
6. Digitise governance workflows
- Adopt digital platforms for:
- Board evaluations and succession planning
- Tracking director training compliance
- Generating reports for CG disclosures
Final note
The reforms demand more than box-ticking. Boards are expected to take the lead in driving the implementation of these changes – not merely as a compliance exercise, but as an opportunity to strengthen governance culture and long-term stakeholder value.
Given the short lead time for several key changes, companies should conduct early planning. A structured and proactive approach will be essential for ensuring meaningful and credible reporting.
Contact our team for tailored workshops on CG Code compliance.
Gloria Sung, Of Counsel
gloriasung@hkytl.com; +852 3468 7292
Alfred Leung, Partner
alfredleung@hkytl.com; +852 3468 7202
This article is introductory in nature. Its content is current at the date of publication. It does not constitute legal advice and should not be relied upon as such. You should always obtain legal advice based on your specific circumstances before taking any action relating to matters covered by this article. Some information may have been obtained from external sources, and we cannot guarantee the accuracy or currency of any such information.
