A leading proxy voting and corporate governance group is tightening its guidelines for companies based in Hong Kong, long considered to be a blackspot for shareholders' rights.
ISS Governance Services, a division of RiskMetrics Group that has 2,300 institutional clients encompassing asset managers, hedge funds and pension funds, is seeking to clamp down on the preferential issuance of shares and to oppose companies that diminish the role of independent directors.
According to ISS, many Hong Kong-based companies routinely seek approval to issue shares equivalent to 20 per cent of their share capital a year, at a discount of up to 20 per cent, all without pre-emption rights enabling all existing shareholders to participate.
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