Corporate Governance

Abstract

This chapter addresses corporate governance in Hong Kong. The chapter reviews the ways in which a company’s management is regulated in Hong Kong at common law and equity, by statutory legislation, by the company’s constitutional document (the articles), and by regulatory rules. Such a framework addresses issues such as board structure and operation, the personal interests of directors, dealings between the company and directors, limiting the power of directors, disclosure of information, and the question of when shareholders should be involved in decisions of the board. The chapter shows that due to the domination of companies in Hong Kong by either families or state-owned companies from mainland China, Hong Kong companies have the typical agency problem we see in the United States and the United Kingdom, namely weak performance by the managers, and also suffer from the misappropriation of corporate assets through connected or related party transactions.