The Hong Kong Institute of Certified Public Accountants is calling for entries to the Best Corporate Governance Disclosure Awards 2010.
Last year, a new category for listed companies with mid-to-small market capitalisation was carved out of the non-Hang Seng Index group. The Institute says that the market’s response was positive and this helped to establish good corporate governance benchmarks amongst mid-tier and smaller companies.
“We have decided to carry on with this new category, which can be quite fluid, and we expect to find new winners emerging. Some previous contenders and winners may move up to the large-cap category as their market capitalisation increases through growth in their business and expansion of the market,” says Chew Fook Aun, vice president of the institute.
This year there will be five award categories in total: Hang Seng Index (HSI)-constituent companies, non-HSI companies (large market capitalization), non-HSI companies (mid-to-small market capitalization), H-share companies, and public sector/not-for-profit organisations.
This year, the institute hopes to give additional attention to reports of public sector/not-for-profit organisations. Bearing in mind that these organisations differ substantially in size, resources and complexity, besides the main awards, the judges may consider giving out special mentions or commendations if they can identify suitable smaller organisations whose corporate governance efforts merit recognition.
“To improve the awards and ensure they always remain relevant, we look closely at the marking scheme and update it to reflect the current expectations and aspirationsof the market and the wider community. This year, for example, we deal with areas such as board performance, and whether the company has a process in place that encourages the internal reporting of major irregularities,” says Stephen Law, chairman of the awards’ organising committee.
Other areas of focus include whether the company’s management discussion and analysis looks at future prospects of the business and not just its past performance, and whether the company lists the announcements issued during the year. “We will also pay close attention to corporate social responsibility and sustainability reporting,” Law continues.
An initial screening process excludes annual reports that do not meet the minimum standards for further consideration. Among the reasons for failing at this first hurdle are if a company's shares have been suspended for a prolonged period or the company is unable to comply with the fundamental provisions in the Code on Corporate Governance Practices.
As in previous years, there are diamond, platinum and gold awards in each category. There are also significant improvement awards for companies and organisations that have shown substantial improvements in corporate governance standards. The judges may also award special mentions and commendations for other worthy annual reports.