Hong Kong Exchanges and Clearing (HKEx) flag (right) waves with a Chinese flag outside the exchange in Hong Kong. The HKEx will request more diversity in companies' boardrooms. Mike Clarke / AFP

The Hong Kong Exchanges & Clearing Ltd's proposal for listed companies to have a more diversified board of directors has been positively received by many stakeholders.

HKEx started a consultation in September proposing that the nomination committee (or the board) should have a policy concerning diversity in the boardroom, and should disclose the policy or have a policy summary in the corporate governance report.

Edith Shih, president of The Hong Kong Institute of Chartered Secretaries (HKICS), briefed the media on Friday that most listed companies as well as professional groups that participated in HKEx's soft consultation were very supportive of its proposals.

"Although the consultation period will last till Nov 9, the answer (to its proposals) seems ready to come out," said Shih, adding that a more diversified board is a major trend.

According to a research conducted by HKICS in relation to board diversity, among all Hang Seng Index companies, 40 percent had no female directors in 2011.

As at May 31, 2012, the total number of directorships was 13,397, including 1,380 held by women, representing less than 10 percent, according to HKEx data; and the number of female directors did not see a substantial increase over the past five years.

Shih stressed that the lack of women among Hong Kong's board of directors was not a result of the city having a small number of women professionals.

"Around 64 percent of HKICS members are women, and 48 percent of them are accountants in Hong Kong and 46 percent are lawyers (in the city)," said Shih.

She also pointed out that according to the research, the proportion of female directors in H-share companies are higher than it was in all HIS companies. By 2011, around 11.04 percent of all board of directors of H-share companies were women, while the proportion was 8.32 percent for all HIS companies.

Researches have shown that better business outcomes are associated with board diversities. According to a research report issued by Credit Suisse which analyzed 2,400 companies (MSCI all Country World Index), the conclusions drawn were that companies with at least one woman on board would have outperformed stocks with no women on board by 26 percent over the last six years.

Stocks with greater gender diversity also tend to perform best when markets are falling, according to the report.

HKICS's research also found that the average age of directors in 2011 is over 58, and has risen in recent years - with over three quarters of directors being over 50; more than half of directors have five years or less service on their boards, which is a little surprising compared to the general impression of longevity of board appointments in Hong Kong.

sophiehe@chinadailyhk.com

(HK Edition 10/06/2012 page2)