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Corporate Governance

Background

The Hong Kong Mortgage Corporation Limited (Corporation), established in March 1997, is wholly owned by the Hong Kong Special Administrative Region Government through the Exchange Fund.

 

 

 

Missions

The missions of the Corporation are to promote:

  • stability of the banking sector
  • wider home ownership
  • development of the local debt market
  • development of retirement planning solutions.

 

Corporate Governance Practices

The Corporation operates on prudent commercial principles and is committed to ensuring a high standard of corporate governance to improve the overall accountability, transparency and long-term sustainability of its operations.  The Corporation’s corporate governance practices are set out in its “Corporate Governance Code” (Code) approved by the Board.  The Code is premised on the principles of fairness, transparency, accountability and responsibility to all stakeholders and has been issued to the shareholders, Directors and staff members.

 

Corporate Governance Code

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Shareholders

All the shares of the Corporation are beneficially owned by the Financial Secretary of Hong Kong as Controller of the Exchange Fund.

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The Board

The Board is responsible for leading the Corporation and promoting its success in an accountable and effective manner.  To provide strategic leadership and effective control of the Corporation, the Board meets in person at least four times a year to oversee the Corporation’s business strategy and policies, budgeting and planning, organisational and financial performance, risk management, human resources as well as community relations. 

 

Board of Directors

 

Directors are requested to declare their or their respective connected entities’ material interests in any matter to be considered by the Board.  If a Director or any of his or her connected entities has a conflict of interests in a matter to be considered by the Board, such Director will abstain from, and not be counted in the quorum in respect of, voting on such matter at the Board meeting.

 

The Corporation maintains a directors’ and officers’ liability insurance policy for its Directors and officers against legal proceedings and other claims arising in the course of discharge of their duties in respect of the Corporation.

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Chairman and Chief Executive Officer

The roles of Chairman and Chief Executive Officer are separate and not performed by the same individual, which ensures a clear division of responsibilities between the Board and the executive functions of the Corporation’s Management.  The Board is responsible for laying down strategic direction and business guidelines, approving financial objectives and closely monitoring the Corporation’s performance on an ongoing basis.  The Chief Executive Officer, who is accountable to the Board, is responsible for leading Management in implementing the Board’s decisions in a proper and efficient manner.  The Chief Executive Officer also ensures that adequate information relating to the Corporation’s business is reported to the Board on a regular basis.

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Company Secretary

The Company Secretary is accountable to the Board and her main duty is to ensure that all company secretarial procedures are followed by the Corporation and the Board.  In addition, the Company Secretary ensures that Board Papers are provided to Directors in a timely manner prior to each Board meeting.  Directors have access to the advice and services of the Company Secretary with a view to ensuring that applicable laws, rules and regulations are complied with in respect of Board proceedings.

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Audit Committee

The Audit Committee is responsible for reviewing the Corporation’s financial statements, the composition and accounting principles adopted in such statements, the results of the financial audits, and the Corporation’s management procedures to ensure the adequacy and effectiveness of its internal controls systems.

 

Terms of Reference of the Audit Committee

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Internal Auditor

The Internal Audit Department operates independently of Management and plays a major role in assessing the internal controls systems of the Corporation.  The Internal Audit Department is led by the Chief Internal Auditor who reports directly to the Chairman of the Audit Committee on all matters relating to the Corporation’s internal controls.  The Chief Internal Auditor also reports to the Chief Executive Officer on day-to-day administrative matters of the Internal Audit Department, and has authority to communicate directly with the Chairman of the Audit Committee without reference to Management.

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External Auditor

The external auditor is allowed to communicate freely with the Chief Internal Auditor and the Audit Committee.  The auditor would issue a letter to the Audit Committee on an annual basis to confirm its independence with respect to the Corporation.

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Financial Reporting

The Corporation aims to present a clear, balanced and comprehensible assessment of its performance, financial position and prospects to its stakeholders and the general public.  Directors are responsible for the preparation of the financial statements, and there is a statement by the auditor regarding its reporting responsibilities in the Independent Auditor’s Report on such financial statements.  Directors are to ensure that financial statements are prepared so as to give a true and fair view of the financial status of the Corporation.  The annual and interim results of the Corporation are announced in a timely manner after the end of each relevant period.

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Internal Controls

The Board has the overall responsibility for the Corporation’s internal controls systems and, through the Audit Committee, conducts periodic reviews on the effectiveness and efficiency of the systems.

 

Various committees have been established to ensure the efficient operation and prudent risk management of the Corporation.  These include the Corporate Risk Management Committee which is chaired by an Executive Director to oversee the risks of the Corporation from an enterprise-wide perspective, and the Operational Risk Committee, the Credit Committee, the Transaction Approval Committee and the Asset and Liability Committee, which are management committees chaired by the Chief Executive Officer.  Each of these committees has clear and well-defined terms of reference.

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Compliance Reporting

The Compliance Function is part of the Legal Office and is established for better management of regulatory and compliance risks.

 

The Compliance Function is led by the Chief Compliance Officer who reports to the Chief Executive Officer through the General Counsel.  In accordance with the Compliance Policy and the Compliance Manual of the Corporation, the Compliance Function monitors and advises departments of the Corporation on their compliance practices with a focus on conflict of interests, anti-corruption, anti-discrimination, competition, and privacy and personal data protection matters.  To provide transactional support, the Compliance Function reviews and participates in the sign-off of key transactions.  It also organises training to strengthen staff knowledge on compliance matters.  To enhance staff knowledge on compliance matters, each staff member is required to pass an annual compliance test organised by the Compliance Function.

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Code of Conduct

The Corporation requires the highest standards of integrity and conduct from its staff members.  The requirements and the relevant legal obligations are clearly set out in the Corporation’s Code of Conduct (Code of Conduct) which forms part of the Staff Handbook.  The Code of Conduct sets out, in particular, provisions in regard to potential conflict of interests that may arise between the personal interests of staff members and the interests of the Corporation, and other provisions designed to ensure that staff carry out their job duties properly, ethically, impartially and free from any suggestion of improper influence.  Staff members are required to give written confirmation of their compliance with the Code of Conduct on an annual basis.

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Communication

The Corporation attaches great importance to communication with the public.  The Annual Report of the Corporation contains comprehensive information on its business strategies and developments.  The Corporation’s website (www.hkmc.com.hk) offers timely access to the Corporation’s press releases and its business information.  The Corporation also maintains a telephone hotline to service enquiries from the public.

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Corporate Social Responsibility

As a socially responsible organisation, the Corporation cares for both its staff and the community, and is committed to fulfilling its corporate social responsibility by caring for its staff’s wellbeing, participating in charity activities and implementing environmental protection measures.

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Conclusion

The Corporation will continue to review its corporate governance framework and improve those practices as appropriate in the light of ongoing experience, regulatory changes, international trends and developments in order to enhance the Corporation’s efficiency and effective management in pursuit of its missions.