Director Empowerment

Regulators around the world have placed increasing emphasis on the role of the board, in particular the role of Independent Non-Executive Directors (INEDs), what is expected of them, and the knowledge, expertise and personal qualities they must possess in order to effectively discharge their duties. 

In light of this development, the HKMA has taken various initiatives to enhance board-level governance of locally-incorporated banks and to help ensure their directors, with particular emphasis on INEDs, have the necessary knowledge, skills and attitude to provide effective leadership in bank governance.

Supervisory Guidance

In order to empower INEDs and ensure they receive proper support to fulfil their role, the HKMA issued a set of guidance in December 2016 to locally-incorporated banks for implementation starting from December 2017. The guidance covers the following major areas:

  • Constitutions of the board and its committees;
  • Roles and qualities of INEDs;
  • Independence and tenure;
  • Remuneration of INEDs;
  • Board practices in relation to INEDs; and
  • Training and development requirements for INEDs.

The HKMA has also updated the relevant module of the Supervisory Policy Manual, i.e. CG-1 “Corporate Governance of Locally Incorporated Authorized Institutions”, in October 2017 to incorporate this guidance together with other guidelines on corporate governance.

Development Programme for INEDs

To better equip and empower INEDs in discharging their responsibilities, the HKMA launched a structured development programme for INEDs of locally incorporated banks in September 2016. The Programme comprises three main components:

  • Experience and insight sharing conference;
  • Thematic seminars on topical issues; and
  • On-boarding sessions for newly appointed INEDs.

On-boarding Programme for INEDs

As part of the development programme, the HKMA launched a new On-boarding Programme for newly appointed INEDs in October 2017. The programme provides essential practical knowledge about the financial services industry with a special focus on the evolving landscape and regulatory environment of the banking industry.

Knowledge Kit for INEDs

In April 2018, the HKMA published the Knowledge Kit for INEDs to provide newly appointed INEDs with a comprehensive yet easy-to-read reference on essential banking and regulatory knowledge. It helps newly appointed INEDs to take up their role and responsibilities more effectively throughout the on-boarding process. The Knowledge Kit covers the following six areas of essential knowledge:

  • The Financial System;
  • Financial Market Infrastructure;
  • Banking Supervision;
  • Risk Management;
  • Governance and Ethics; and
  • Banking Services and Operations.

Last revision date : 26 August 2019