Director 'overboarding' spark calls for reforms

There are 113 firms where a director serves on more than six boards.

Bloomberg reports that new independent directors who are already spread thin by serving in over six other corporate boards will be called to explain by the Hong Kong stock exchange by January if they still have the time to sufficiently represent shareholder interests.

“Where a director sits on too many boards, particularly if they are listed companies’ boards, it is questionable whether they would be able to devote sufficient time to their duties in respect of each issuer on whose board they sit,” the exchange said in a 2017 paper.

Hong Kong is home to 113 companies with a director who serves on more than six boards, Bloomberg analysis show, which is nearly triple that of New York stock exchange at 39 and eight in London.

Also read: Hong Kong trails behind Singapore in corporate governance

The new bourse rules would require disclosure but would not enforce a cap unlike the Shanghai and Shenzhen exchanges where independent directors are limited to no more than five boards.

“It’s a concern when we see someone on 10 or 11 boards,” said Pru Bennett, BlackRock Inc.’s managing director and head of investment stewardship for Asia Pacific. Independent directors “are really our representatives on the board and we need them to have the time and capacity to contribute and represent minority shareholders.”

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