In March 2015, the Securities and Futures Commission (SFC) of Hong Kong launched a consultation to examine whether the financial market of Hong Kong should implement the Principles of Responsible Ownership, based on the Stewardship Code which was first introduced into the UK financial market in 2010. One year later, in March 2016, the SFC announced in its consultation conclusions that it would adopt the Principles subject to some amendments. My paper examines whether the implementation of such Principles will be effective in encouraging shareholder activism and engagement in the corporate governance of Hong Kong. Contrary to the SFC’s conclusions, I argue that due to the nature and characteristics of Hong Kong’s financial market, the Principles are unlikely to foster greater shareholder involvement. The article, which is published in the October 2016 edition of the Journal of Corporate Law Studies, suggests alternative legal and institutional mechanisms that can better enhance investor engagement.
Kong Shan John Ho is an Associate Professor of Law at City University of Hong Kong.