A prominent corporate governance activist in Hong Kong has criticized a government plan that would enable companies to conceal the identity cards of directors on the local companies’ registry website.
Hong Kong is proposing changes to corporate law that would block public access to the residential addresses of directors and their full government-issued identity card numbers, which would make it harder for investors to do due diligence on companies.
Caterpillar’s announcement last week that it had uncovered accounting misconduct at a Hong Kong-listed Chinese mining equipment group, which had it acquired last year, has cast a spotlight on the controversy.
The activist, David Webb, characterized the government’s proposal, drafted to protect the privacy of individuals, as “confused”.
Mr. Webb said he was “concerned” by the proposal to block access to directors’ full identity card numbers but dismissed widespread speculation that the government’s move was a response to the controversial stories by Bloomberg and the New York Times last year about the wealth of relatives of senior Chinese leaders. The planned changes, he said, were not “part of a conspiracy. It’s just incompetence.”
The move to protect company directors’ privacy dates back to a public consultation that began in 2010 in Hong Kong. In a submission that was part of that process, Hong Kong’s Law Society had recommended that identity numbers “should be recorded and disclosed in full [because] persons with identical names are not uncommon”.
The plan has also come under fire from the Hong Kong Journalists Association. It has become commonplace for mainland Chinese citizens to set up shell companies in Hong Kong, and journalists looking into the wealth of relatives of Chinese leaders have used information from companies’ registries to identify their assets in the city.
On Wednesday, Hong Kong’s High Court sentenced a mainland Chinese to 10 and a half years in jail in a HK$13bn (US$1.7bn) money laundering case after he was found to have been instructed to open bank accounts in Hong Kong, using his name and that of a company he registered in the city.
Carrie Lam, head of Hong Kong’s civil service, said last week that the government will continue to listen to the public’s views on the proposed change.