Hong Kong

Vivian Wai-man Lam, Partner
Paul Hastings (Hong Kong)

Quinn Dang, Associate
Paul Hastings (Washington, DC)

Although Hong Kong was under British colonial rule for decades, women’s rights and gender equality had only been enshrined in the Hong Kong legal system for a little over 20 years when, in 1996, the United Nations Convention on the Elimination of All Forms of Discrimination against Women (“CEDAW”) was extended to Hong Kong. 

Today, there are a number of laws that address gender inequality and women’s rights in Hong Kong.1 However, the issue of representation of women in board rooms has been prominent only in the last decade.  A growing group of women is working to change that conversation.  In 2013, the 30% Club Hong Kong was formed with the goal of achieving 20% female representation by the year 2020, working toward a long-term goal of 30% and to reduce zero all-male boards by the end of 2018.

The Law and the Equal Opportunities Commission

Fundamental human rights espoused in the International Covenant on Civil and Political Rights are incorporated in the Hong Kong Bill of Rights Ordinance (“BORO”) and specifically in the Bill of Rights.2     According to Article 22 of the Bill of Rights, all persons are equal before the law, are entitled without any discrimination to the equal protection of the law and are protected against discrimination on grounds such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status.3   Furthermore, men and women have equal rights to the enjoyment of all civil and political rights set forth in the BORO.4

The BORO binds the government, all public authorities, and any person acting on behalf of the government or public authority.5  However, the Sex Discrimination Ordinance (SDO) is an anti-discrimination law passed in 1995 that applies to all employers in Hong Kong (including the government).  Discrimination on the basis of sex, marital status6 and pregnancy, and sexual harassment is unlawful under the SDO.7   In addition to rendering certain discriminatory acts unlawful, the SDO also provides for the establishment of the Equal Opportunities Commission (EOC) to work toward the elimination of discrimination and harassment as well as to promote equal opportunity between men and women.8

The EOC was established for the purpose of implementing the anti-discrimination ordinances in Hong Kong and helping affected employees, their colleagues, employers, and other concerned parties to understand their responsibilities under the anti-discrimination regulations in Hong Kong.  The EOC provides guidance on the procedures and systems that can help to prevent discrimination and to deal with unlawful acts in employment.  However, failure on the part of a person to observe any of the recommendations set out therein does not automatically render him or her liable to any proceedings as these are merely guidelines lacking the force of law.9  

The Facts and Statistics

Notwithstanding the extensive legislative protections afforded to women and emphasis on gender equality, statistics show that Hong Kong still lags behind many countries with respect to representation of women in the boardroom. However,  there has been improvement in the past decade in the representation of women on boards in Hong Kong’s top-listed companies.10   By a measure which looks at the percentage of women on the board of the 51 blue-chip companies on the Hang Seng Index (HSI)11 , the number of women directors reached 13.8 percent in 2018 (from 8.9% in 2009).12   Thirteen HSI companies now have 20% or more women on their boards.13  

However, according to Webb-site.com, a website established by David Webb, a retired investment banker and an equity market analyst who collects extensive data on Hong Kong-listed companies, there are currently approximately 2,174 listed companies in Hong Kong and the average number of female directors per listed company is 1.06.14   In addition, over 40 percent of the listed companies in Hong Kong have no female representation on their boards.15   The following table summarizes the number of female directors on the board of companies with a current primary listing in Hong Kong:16

Number of
female directors
Number of
Companies
Total seats Cumulative
companies
Cumulative
seats
6 2 12 2 12
5 8 40 10 52
4 56 224 66 276
3 134 402 200 678
2 405 810 605 1488
1 822 822 1427 2310
0 747 0 2174 2310

An Attempt to Change

The Stock Exchange of Hong Kong Limited (HKSE) helps to promote best practices with respect to corporate governance among issuers.17  The governance framework is embodied in the Code on Corporate Governance Practices (the “Code”), which was developed by the HKSE with a view toward providing a fair, orderly, and efficient market for trading securities. 

In September 2013, the HKSE implemented amendments to the Code to introduce a “comply or explain” requirement for every Hong Kong listed company's nominating committee to implement a board diversity policy, and to disclose in its annual report details of the policy and the company’s progress in achieving the objectives outlined in the policy.18 The amendments also expressed a sense that “the board should have a balance of skills, experience, and diversity of perspectives appropriate to the requirements of the issuer’s business” but did not specifically reference gender.19 In July 2018, HKSE released guidance to companies – this time addressing gender.20 On the topic of gender diversity, the guidance states:

A growing number of studies have shown that gender and other aspects of diversity enables the board to better able to understand their customers’ and stakeholders’ needs and is positively associated with the issuer’s financial performance, more effective board and better risk management. Hong Kong appears to be lagging behind other leading markets in terms of ratio of women on boards and fall below the average growth according to some research statistics.21

It further notes that a “substantial proportion of issuers are without a single woman on their boards” and that “there should be more transparency on the considerations for diversity, including gender, during the nomination process of directors.”

The guidance provides that pursuant Rule 13.92 (effective on January 1, 2019), a diversity policy “should include measurable objectives that the issuer has set for implementing the diversity policy (for example, those relating to gender) and progress on achieving those objectives.”22

Although this comply and explain provision was a major step forward, some have argued that it is not enough.  The Chair of the 30% Club HK Steering Committee explains that additional steps include “changing the corporate governance code to direct Hong Kong listed companies’ diversity policies and reporting to explicitly reference and measure gender diversity on their boards and in their management teams.”23

Conclusion

The issue of gender diversity on corporate boards has received more attention in the last decade by the general public, legislature, and government and regulatory bodies.  Although Hong Kong already has legislation promoting gender equality and protection of women’s rights that are comparable to international standards and is making incremental improvements in representation of women on boards, it may take some time before it follows in the footsteps of Norway, Spain, and France, each of which has adopted quota requirements as a means of increasing female representation in boardrooms.

1       Currently, gender equality and women’s rights in Hong Kong are broadly dealt with in the Bill of Rights Ordinance (ch. 383 of the Laws of Hong Kong), Sex Discrimination Ordinance (ch. 480 of the Laws of Hong Kong) and Family Status Discrimination Ordinance (ch. 527 of the Laws of Hong Kong).

2       See Section 8 of the Bills of Rights Ordinance which provides for basic human rights protection in Hong Kong.

3       Bills of Rights Ordinance, Ch. 383 of the Laws of Hong Kong, art. 22, § 8.

4       Bills of Rights Ordinance, Ch. 383 of the Laws of Hong Kong, art. 1(2), § 8.

5       Bills of Rights Ordinance, Ch. 383 of the Laws of Hong Kong, § 7.

6       The Family Status Discrimination Ordinance (ch. 527 of the Laws of Hong Kong), which was passed in 1997, also makes it unlawful for anyone or any organization to discriminate against a person, male or female, on the basis of family status.

7       Sex Discrimination Ordinance, ch. 480 of the Laws of Hong Kong, §§ 5, 7, 8 and 11; Sex Discrimination Ordinance and I, Equal Opportunities Commission, http://www.eoc.org.hk/eoc/GraphicsFolder/showcontent.aspx?content=Sex%20Discrimination%20Ordinance%20and%20I (last visited Sept. 13, 2018).  Both direct discrimination (when a person is treated less favorably than another person of the opposite sex) and indirect discrimination (when a condition or requirements, which is not justifiable, is applied to everyone but in practice adversely affects persons of a particular sex or marital status, or those who are pregnant) on the grounds of sex, martial status and pregnancy are recognized as unlawful acts under the SDO. Sex Discrimination Ordinance, ch. 480 of the Laws of Hong Kong, § 5.

8       Sex Discrimination Ordinance, Ch. 480 of the Laws of Hong Kong, §§ 63 and 64.

9       Code of Practice on Employment under the Sex Discrimination Ordinance, Equal Opportunities Commission, http://www.eoc.org.hk/EOC/GraphicsFolder/showcontent.aspx?content=CoPs on Employment(SDO)&fld=content (last visited Sept. 13, 2018).

10     Fern Ngai, Women on Boards: Hong Kong 2018, Community Business 2 (Mar. 2018).

11     The HSI is a free float-adjusted market capitalization-weighted stock market index in Hong Kong, and is the main indicator of overall market performance in Hong Kong.  Id. at 4.

12     Sophie Hui, Women still struggle for boardroom space, The Standard (Mar. 7, 2018), http://www.thestandard.com.hk/section-news.php?id=193483&sid=4.

13     30% Club HK Announces Progress in Interim Goals, 30% Club (Sept. 28, 2017), https://30percentclub.org/press-releases/view/30-club-hk-annouces-progress-in-interim-goals.

14     Distribution of female directors per HK-listed company, Webb-Site, https://webb-site.com/dbpub/FDirsPerListcoHKdstn.asp?d=2018-03-30 (last visited Mar. 30, 2018).

15     Id.

16     Id.

17     Guidance for Boards and Directors, HKEX (July 2018), http://www.hkex.com.hk/-/media/HKEX-Market/Listing/Rules-and-Guidance/Other-Resources/Listed-Issuers/Corporate-Governance-Practices/guide_board_dir.pdf.

18     Nomination and diversity on Hong Kong boards: Best practice and in practice, Linklaters (Sept. 2014), https://30percentclub.org/wp-content/uploads/2014/10/Linklaters_Nomination_Diversity_HK_Boards.pdf.

19     Breaking the Glass Ceiling: Women in the Boardroom, A Study of Major Global Exchanges, Paul Hastings 25 (Fall 2014)

20     HKEX, supra note 17, at 8.

21     Id.

22     Id.

23     30% Club, supra note 13.