The Hong Kong Institute of CPAs' 2011 Best Corporate Governance Disclosure Awards (“the Awards”) was successfully concluded with the presentation ceremony held at a luncheon at the JW Marriott Hotel on 24 November 2011. The guest of honour, the secretary for financial services and the treasury, Professor K.C. Chan, addressed the audience before presenting the awards to the winners. In his address, Prof. Chan emphasised the importance of good governance standards to Hong Kong's continuing success as an international financial centre. He congratulated the Institute on its work in promoting better corporate governance through the Awards and other activities, and he referred to some of the current government initiatives in this area.  

Mr. Philip Tsai, president of the Institute and chairman of the judging panel, Ms. Susanna Chiu, vice president and chairman of the Professional Accountants in Business Leadership Panel, and Mr. Stephen Law, chairman of the Awards organising committee, also spoke on the benefits to the Hong Kong market and to individual companies and organisations of establishing a strong corporate governance culture, particularly in these uncertain times. They also highlighted the expectations on the twenty-first-century companies and public sector organisations, which needed to understand and to respond to the interests and concerns of broader range of stakeholders and to have a clear strategy aimed at achieving long-term sustainable performance. They also highlighted key features and developments in the 2011 Awards, including the introduction of a new award for sustainability and social responsibility ("SSR") reporting and expressed appreciation of the invaluable work conducted by the reviewers and judges.  

The results of the 2011 Awards were announced at a press briefing on 23 November 2011 conducted by Philip Tsai, Susanna Chiu and Stephen Law. The speakers briefly addressed the audience about the overall standard of the entries, identified examples of the positive corporate governance practices of the winning companies and organisations, as well as areas where, generally, Hong Kong’s corporate governance standards could still be improved. They also spoke about some recent developments in corporate governance locally and internationally.

The Institute was pleased to be able to announce a number of new winners, including those in the Hang Seng Index ("HSI"), large market capitalisation and medium-to-small market capitalisation categories. They commended the corporate governance disclosures and practices of all the winners, whose standards reflected best practice amongst listed companies and public sector organisations in Hong Kong. They also indicated that the judges and reviewers could take into account other relevant information in the public domain, which potentially reflected on the short-listed companies' and organisations' corporate governance culture. Click here for the press release.

The Institute would like to congratulate all the winners and to applaud their commitment to raising their own standards of corporate governance and, through this, helping to raise standards generally in Hong Kong.

Directors, chief financial officers or other senior representatives from the winning companies and organisations attended the Awards luncheon to be presented with their trophies. Slides produced from the winning annual reports were displayed during the presentations. In addition, the CEOs of the joint winners of the SSR reporting award were shown on video talking about the importance for their companies of this aspect of business reporting.

Commentaries on the annual reports of the winning companies and organisations, other observations of the judges and reviewers on the overall standard of corporate governance disclosures and practices in Hong Kong, as well as other background information about the Awards programme, are all contained in the Best Corporate Governance Disclosure Awards 2011 – Judges’ Report.

This is the 12^th successive running of the Awards. It is Hong Kong’s most prestigious corporate governance awards competition, which enjoys strong support from regulators, the government, investor groups, and the business community. The Awards continues to play an important role in establishing benchmarks, encouraging improvements in standards of corporate governance, and raising awareness of the need for transparency and accountability to investors and other stakeholders, which, especially in the case of public sector entities, includes the wider community.

The Awards focuses on voluntary disclosures of relevant information in annual reports that clearly exceeds the bare legal and regulatory requirements. This year the judging criteria were further refined to give greater emphasis to information on risk management and internal controls, as these are regarded increasingly as essential areas of good corporate governance.

The main new feature of the 2011 Awards, the SSR reporting award entailed a completely separate review from the assessment of corporate social responsibility ("CSR") performance in the quality review for the main awards. The SSR review was conducted using a rigorous set of criteria, specifically designed to capture SSR information disclosures and practices.

The judges were pleased to note that the quality of SSR reporting by the short-listed candidates was high. The judges considered that the standard of the best two short-listed companies, namely CLP and HKEx was very close. Although each adopted a slightly different approach to this area of reporting, both were considered to have set a very good example. The judges decided that both companies merited an award for their outstanding performance, which illustrates that, at this stage in the development of SSR reporting, there is more than one acceptable mode of presentation.

The judges considered that CSR reporting generally by the bulk of companies was improving and more companies were including dedicated sections in their annual reports, or separate booklets or on-line reports.

More than 230 annual reports of listed companies and public sector/not-for-profit organisations were reviewed in current year. These included a range of organisations operating in different industry sectors and of different sizes, including international conglomerates, family-controlled corporations and Mainland business entities.

The judges and reviewers were pleased to note that the better companies maintained a high standard of corporate governance practices and disclosures. The HSI and non-HSI large market capitalisation categories remained strong in terms of the overall quality of their corporate governance and this is reflected in the judges' decisions. The H-share category was also highly competitive, where the judges noted that transparency and standards of corporate governance practices amongst Mainland enterprises were continuing to increase in parallel with the development of the Mainland's economy.

In the non-HSI mid-to-small market capitalisation category, which is a relatively new category, while a number of companies were making constructive efforts to upgrade their corporate governance standard, the judges considered that there was still a gap between this and the other listed company categories. As regards the public sector, the judges indicated that they would like to see more organisations in contention for awards. Without compromising the core elements of sound corporate governance, such as transparency, accountability and timely reporting, the judges wished to give encouragement, particularly to smaller public sector organisations with more limited resources, which were making positive efforts to adopt good practices. It was felt that, generally, such organisation could still do more in terms of explaining their governance structure and processes, and advancing their reporting timetable. Nevertheless, this year, in addition to the award winners, the judges' report also specifically mentioned The Hong Kong Housing Society, which the judges felt was making good efforts and should be encouraged to continue to improve.

The judges also identified some areas where overall performance could still be improved. These included better explanations of how board members are chosen, particularly in the public sector, and on emolument policies; more detailed explanations about the implementation of risk management and internal control reviews; more disclosure of the approval process for related party transactions and how business performance is measured.

General Background

The Institute first launched the Awards in 2000 with the twin objectives of encouraging and promoting good corporate governance disclosures and practices, and acknowledging those locally-listed companies and public sector/not-for-profit organisations that exemplified the best corporate governance standards in Hong Kong, as reflected in their annual reports. In 2000 there were three categories, each with a possible diamond, platinum and gold award to be given out, and an overall grand award, making 10 awards in all. In the 2011 Awards, there were five categories and more than 20 awards.

In addition to diamond, platinum, gold awards and significant improvement awards, special mentions/ commendations may be given out for annual reports that are regarded by the judges as worthy efforts deserving of recognition and encouragement.

The judging criteria undergo continuous review and updating to take account of regulatory changes and changes in market and community expectations.

The Institute is very grateful to the reviewers and judges, the supporting organisations and media sponsors, and all the internal parties, including the Awards organising committee of the Professional Accountants in Business Leadership Panel, whose hard work help to make the Awards a success. Acknowledgments are contained in the judges' report for the 2011 Awards.  

The judges' reports for past years are listed below (click on the relevant link):

• 2010
• 2009
• 2008
• 2007
• 2006
• 2005
• 2004
• 2003
• 2002
• 2001