After CG Code B.1.4/B.1.5: How 2026 Corporate Governance Reports Should Write Board Evaluation and Skills Matrix Without Looking Like Checkbox Compliance

On 19 December 2024, Hong Kong Exchanges and Clearing Limited’s subsidiary, the Stock Exchange of Hong Kong Limited (the Exchange), published conclusions to its review of the Corporate Governance Code (CG Code) and related Listing Rules. All proposals received majority support from 261 respondents. The Exchange adopted the package — with modifications — effective 1 July 2025, applying to corporate governance reports and annual reports for financial years commencing on or after that date.

Two of the board-effectiveness Code Provisions that now sit in Appendix C1 are often shorthand-labelled “B.14 / B.15” in market briefing notes: Code Provision B.1.4 (formal board performance evaluation at least every two years, with prescribed CG Report disclosures) and Code Provision B.1.5 (maintain and disclose a board skills matrix). They travel with amended Code Provision B.3.1, which requires the nomination committee to assist the board in maintaining the skills matrix and to support the issuer’s regular evaluation of board performance.

We think 2026 CG Reports will look like checkbox compliance not when a skills-matrix table is missing, but when the matrix is only a rebadged biography grid and the B.1.4 review discloses who ran the process while omitting findings and the measures the board will actually change.

Problem: What the HKEX issuer faces

Biography tables dressed as B.1.5

In the Consultation Conclusions, the Exchange was explicit: maintaining an effective board skills matrix “should not be a box-ticking exercise that merely presents the directors’ biographies (which are already part of an issuer’s annual report) in a different format.” A properly maintained matrix should illustrate the board’s collective experience, skills, qualifications and expertise and connect these with the issuer’s long-term strategy and particular goals, including diversity targets. Individual directors are not expected to be singled out.

That warning matters in 2026 drafting cycles. Many first-cycle packs under the enhanced Code will be tempted to convert existing director biographies into tick-boxes labelled “strategy”, “finance” or “industry”. Under B.1.5, the Corporate Governance Report should set out at least: (a) the mix of skills the board currently has; (b) how the combination of skills, experience and diversity serves the issuer’s purpose, values, strategy and desired culture; and (c) where applicable, further skills sought, plans to acquire them, and how prior-year plans progressed.

Process disclosure without findings under B.1.4

Code Provision B.1.4 upgrades the former recommended best practice on regular evaluation. Issuers should conduct a formal evaluation of the board’s performance at least every two years, confirm in the CG Report whether a review was conducted in the reporting period (and if not, when the next will be), and — when a review was conducted — disclose:

• whether it was conducted internally or by an external provider;
• how it was conducted, including scope and the responsible department(s) / committee(s) / external provider(s);
• any connection between an external provider and the issuer or any of its directors; and
• details of findings, including significant areas of improvement (if identified) and measures taken or planned as a result.

The Conclusions clarify that the review is not intended as a personal assessment of individual directors; focus is on overall board performance and whether that performance — together with skills identified in the matrix — aligns with broader business and strategic goals. Checkbox risk appears when issuers stop at items (a)–(c) and leave (d) as generic “the Board considers its performance satisfactory.”

Nomination-committee workstreams that stay siloed

B.3.1 now tasks the nomination committee with reviewing board structure, size and composition (including skills, knowledge and experience) at least annually, assisting the board in maintaining a skills matrix, and supporting the issuer’s regular evaluation of board performance — alongside succession and independence work. If the nomination committee’s annual assessment of directors’ time commitment (Mandatory Disclosure Requirement paragraph E) is written as an isolated compliance note, while B.1.4/B.1.5 remain in a separate “board effectiveness” appendix with no cross-reference, readers will see three checklists instead of one governance operating system.

Support rates in the consultation were high but not unanimous: around 73% of respondents supported the board performance review proposal and 72% supported the skills-matrix proposal. That majority does not lower the disclosure bar; it raises peer pressure. Investors and proxy readers will compare whether issuers used the Exchange’s Corporate Governance Guide for Boards and Directors (May 2025) and the Board Effectiveness topic pages as a quality floor — or as wallpaper.

Method: Rules, approach and data

Anchor on the Code text, then use the Guide as operating detail

Start from Appendix C1 Code Provisions B.1.4, B.1.5 and B.3.1, then use the May 2025 CG Guide’s Board Effectiveness chapter as the practical elaboration the Exchange promised in the Conclusions. Verified Guide expectations that help escape box-ticking include:

• Skills matrix purposeDisplay collective skills and connect them to long-term strategy and goals (including diversity targets); enable gap identification for expansion or objective change; inform refreshment, succession or upskilling — without singling out individuals.
• Meaningful matrix disclosureRefrain from simply replicating biographies; cover existing skills mix, strategy/culture linkage, and plans/progress on further skills. No specified format is mandated; the Guide’s illustrative matrix (strategy, leadership, industry knowledge and experience, financial literacy, risk management and compliance, people management, diversity, emerging topics such as artificial intelligence, and qualifications) is an example, not a compulsory template.
• Performance review designStructure reviews to fit circumstances; consider more frequent reviews than the two-year minimum if operations are complex or recently changed; keep the process sufficiently robust and confidential so candid feedback is possible; focus on the board as a whole; disclose scope, mode, methodology and findings, including improvement areas and measures.
• Internal vs externalEither is permitted; weigh objectivity, expertise and cost. Complex or recently expanded businesses should consider external facilitation or hybrid design (external help on process design and findings assessment).

Issuers preparing bilingual CG Reports should keep Traditional Chinese listing-rule terminology consistent (企業管治守則、守則條文、董事會表現評核、董事會技能表、不遵守就解釋). Dual-language control sits naturally with disciplined financial-translation workflows; narrative quality and evidence trails sit with broader ESG reporting and internal-control advisory processes.

Build one “skills–strategy–action” spine

A practical method that matches the Code’s three B.1.5 limbs and B.1.4(d) is a single internal spine before drafting:

1. Strategy mapList the issuer’s stated purpose, values, strategy themes and desired culture as disclosed elsewhere in the annual report.
2. Collective skills inventoryMap board-level capabilities to those themes (adequacy vs essential/future/aspirational skills, using the Guide’s illustrative keys only if they aid reader understanding).
3. Gap and plan registerRecord further skills sought, acquisition routes (appointment, training, committee redesign), owners and timelines — and prior-year progress for continuity across reporting years.
4. Evaluation bridgeFeed the same gap register into the B.1.4 review scope so findings and “measures taken or planned” are not invented after the fact.

Where skill gaps imply capital allocation, asset strategy or valuation assumptions, boards may also need valuation-side challenge; that link should be described only where real, not forced into every CG narrative.

Separate B.1.4 board evaluation from individual-director assessments

The Exchange’s Conclusions and Guide both separate (i) whole-board performance review under B.1.4 from (ii) the nomination committee’s annual assessment of each director’s time commitment and contribution under Mandatory Disclosure Requirement paragraph E. Conflating them produces either an invasive individual scorecard mislabelled as B.1.4, or a soft board-effectiveness paragraph that never produces actionable findings. Write them as linked but distinct workstreams: individual accountability informs nomination decisions; board-level evaluation informs composition, process and skills plans.

Implication: What HKEX issuers should do for 2026 CG Reports

For issuers with FY commencing on or after 1 July 2025

The enhanced Code already applies to the CG Reports and annual reports that many issuers will finalise through 2026–2027. Boards should ask management for a drafting pack that can survive a “biography test” and a “findings test”:

• Does the skills matrix add information beyond what a careful reader already sees in directors’ biographies?
• Does it explain how the combination of skills, experience and diversity serves purpose, values, strategy and culture?
• If gaps exist, are plans and prior-year progress disclosed where applicable?
• For any B.1.4 review in the period: are findings and measures stated with enough specificity that a shareholder can see what will change before the next cycle?
• If no review occurred in the period, is the next scheduled review date stated, and are gap-year remedial actions disclosed?

For December year-end and other calendar cohorts

Issuers should not treat “every two years” as permission to leave the skills matrix static in off-years. B.1.5 is an ongoing maintain-and-disclose obligation. In a gap year between formal B.1.4 reviews, the Guide encourages disclosure of related actions (remedial steps from the prior review; priority areas for the next review). Nomination-committee minutes and terms of reference should already show B.3.1 work in motion.

Comply-or-explain is not a soft landing for empty findings

B.1.4 and B.1.5 are Code Provisions on a comply-or-explain basis. Deviation requires Considered Reasons and Explanation — a clear rationale for alternative actions, their impacts and outcomes — not a one-line statement that the board “considers its composition appropriate”. An explain that amounts to “we reviewed informally” without methodology, findings or measures will read as the box-ticking the Exchange already rejected in December 2024.

Conclusion

The first full seasons of CG Reports under the 1 July 2025 Code enhancements will separate issuers who treat B.1.4 and B.1.5 as paired operating tools from those who treat them as new tables to populate. The Exchange’s own Conclusions already defined the failure mode: a skills matrix that only reprints biographies, and a board evaluation that never connects collective skills to strategy or to concrete improvement measures. For 2026 drafting, the quality bar is not whether a matrix appears — it is whether shareholders can see what the board can do, what it still needs, and what it will change next.

Edited / written by: Amanda Cheung, Founder, AMMO Group