100 | Financial and Monetary Affairs
record requirement for certain listing applicants, and increase of the minimum expected market capitalisation and the minimum number of shareholders at the time of listing. The Rules amendments came into effect on March 31, 2004.
Following publication of the Consultation Conclusions on Proposed Amendments to the Listing Rules relating to Corporate Governance Issues in January 2003, the HKEX promulgated the Rules amendments which came into effect on March 31, 2004. It also promulgated the Code on Corporate Governance Practices after a two-month public consultation in the first quarter of 2004. The Code set out standards and principles of good governance covering areas such as remuneration of directors and senior management, accountability and audit, delegation by the Board and communication with shareholders. The Code provisions were on a par with the best current international market practices, having regard to Hong Kong's own particular circumstances. The Code represented a significant move towards adoption of international benchmarks of corporate governance.
In October, the SFC and HKEX released a joint conclusion report on the Consultation Paper on the Regulation of Sponsors and Independent Financial Advisers (IFAs). The HKEX has amended the Listing Rules concerning the conduct of sponsors and IFAs, in particular the sponsors' role in advising listed companies and listing applicants and in conducting due diligence. The amendments become effective in January 2005. To further enhance the regulatory framework for sponsors and IFAs, SFC will conduct a public consultation on specific eligibility criteria requirements created specifically for sponsors and IFAS in 2005. In preparation for the consultation, SFC conducted an investor survey seeking views from retail and institutional investors on the standards of sponsors in Hong Kong and on possible measures to enhance the standards.
Financial Reporting Council
Quality and reliable financial reporting is of paramount importance for upholding Hong Kong's corporate governance regime and maintaining investors' confidence. In this regard, the Government is acutely aware of the need to maintain and enhance an effective, transparent and accountable regulatory regime for the accountancy profession that is on a par with international standards. Building on the public support during the consultation exercise in September 2003, the Government is working with the HKICPA, SFC and HKEX on legislative proposals to enhance the oversight of auditors and quality of financial reporting of listed corporations.
The key initiative is the proposal to establish a new statutory body to be named the Financial Reporting Council (FRC). This is a follow-up to the public consultation conducted by the Administration in late 2003 on the 'Proposals to (a): Enhance the Oversight of the Public Interest Activities of Auditors; and (b) Establish a Financial Reporting Review Panel', which received strong support from most of the respondents.
The FRC will oversee both an Audit Investigation Board and the Financial Reporting Review Committee. The former will be tasked to carry out investigations into
suspected irregularities concerning auditors of corporations/collective