HSBC 2004 Annual Report Download - page 210

HSBC HOLDINGS PLC
Report of the Directors (continued)
208
then ‘Corporate Governance’ then ‘Board
Committees’ . The members of the Committee
throughout 2004 were Lord Butler (Chairman), W K
L Fung, S Hintze, C S Taylor, each of whom is an
independent non-executive Director, and G V I
Davis and Lord May, who are non-Director members
of the Committee. Baroness Brigstocke was a non-
Director member of the Committee until her
untimely death in April 2004. E M Diggory was
appointed as a non-Director member of the
Committee on 26 November 2004.
There were four meetings of the Corporate
Social Responsibility Committee during 2004.
Following each meeting the Committee reports back
to the Board on its activities.
Further information is available in HSBC’ s
Corporate Social Responsibility Report 2004,
available in April 2005.
Corporate Governance Codes
HSBC is committed to high standards of corporate
governance. HSBC Holdings complied throughout
the year with the code provisions of the Combined
Code on corporate governance appended to the
Listing Rules of the Financial Services Authority
and with the provisions of Appendix 14 to the Rules
Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited.
Appendix 14 to the Rules Governing the Listing
of Securities on The Stock Exchange of Hong Kong
Limited was substantially revised during 2004. The
new provisions of Appendix 14 will apply for
subsequent reporting periods.
Differences in HSBC Holdings/New York
Stock Exchange corporate governance
practices
In November 2003, the US Securities and Exchange
Commission approved the New York Stock
Exchange’ s (‘NYSE’ ) new corporate governance
rules for listed companies. Under these new rules, as
a NYSE-listed foreign private issuer, HSBC
Holdings must disclose any significant ways in
which its corporate governance practices differ from
those followed by US companies subject to NYSE
listing standards. HSBC Holdings believes the
following to be the significant differences between
its corporate governance practices and NYSE
corporate governance rules applicable to US
companies.
US companies listed on the NYSE are required
to adopt and disclose corporate governance
guidelines. The Listing Rules of the UK Financial
Services Authority require each listed company
incorporated in the United Kingdom to include in its
Annual Report and Accounts a narrative statement of
how it has applied the principles of the Combined
Code on Corporate Governance appended to the
Listing Rules (‘Combined Code’ ) and a statement as
to whether or not it has complied with the code
provisions of the Combined Code throughout the
accounting period covered by the Annual Report and
Accounts. A company that has not complied with the
Code provisions, or complied with only some of the
Code provisions or (in the case of provisions whose
requirements are of a continuing nature) complied
for only part of an accounting period covered by the
report, must specify the Code provisions with which
it has not complied, and (where relevant) for what
part of the reporting period such non-compliance
continued, and give reasons for any non-compliance.
As stated above, HSBC Holdings complied
throughout 2004 with the code provisions of the
Combined Code. The Combined Code does not
require HSBC Holdings to disclose the full range of
corporate governance guidelines with which it
complies.
Under NYSE standards, companies are required
to have a nominating/corporate governance
committee, composed entirely of independent
directors. In addition to identifying individuals
qualified to become board members, this committee
must develop and recommend to the board a set of
corporate governance principles. HSBC’s
Nomination Committee, which follows the
requirements of the Combined Code, includes a
majority of members who are independent. All
members of the Committee are non-executive
Directors and three of the four members, including
the Committee chairman, are independent non-
executive Directors. The Committee’s terms of
reference do not require the Committee to develop
and recommend corporate governance principles for
HSBC Holdings. As stated above, HSBC Holdings is
subject to the corporate governance principles of the
Combined Code.
Pursuant to NYSE listing standards, non-
management directors must meet on a regular basis
without management present and independent
directors must meet separately at least once per year.
During 2004, HSBC Holdings’ non-executive
Directors met twice as a group with the Group
Chairman, but with no other executive Directors
present, and met once as a group without the Group
Chairman or other executive Directors present.
HSBC Holdings’ practice, in this regard, complies
with the Combined Code.