From 1 July 2025, the revised Corporate Governance Code introduced a new Code Provision, B.1.4, requiring listed issuers to conduct a formal evaluation of the board's performance at least every two years. This provision was adopted through HKEX's December 2024 Consultation Conclusions, with the 1 July 2025 date governing when the resulting disclosures begin appearing in Corporate Governance Reports for financial years commencing on or after that date. This marks a clear elevation of board effectiveness from a recommended practice to a comply or explain obligation, with specific disclosure requirements attached.
What the Requirement Actually Says
Under Code Provision B.1.4, issuers should conduct a formal board performance review at least once every two years and confirm in the Corporate Governance Report whether a review was carried out during the reporting period. If no review was conducted, the issuer should state when the next review will take place.
If a review was conducted, issuers should disclose whether it was conducted internally or by an external provider, how the review was conducted including the scope and the parties involved, any connection between an external provider and the issuer or its directors, and the findings, including significant areas for improvement and the measures taken or planned as a result.
HKEX has emphasised that the review is not intended to be a personal assessment of individual directors. The focus should be on the overall performance of the board and whether that performance, together with the skills, expertise, and qualifications identified in the board skills matrix, is aligned with the issuer's broader business and strategic goals. This last point is worth underlining, since the board skills matrix is itself now a standalone requirement under a separate provision, Code Provision B.1.5, introduced in the same reform package. Rather than being a background reference document, the matrix is meant to actively feed into and be tested by the performance review, giving the two provisions a direct working relationship even though they sit as distinct disclosure obligations.
Why This Matters
The introduction of a formal, recurring board performance review reflects a broader regulatory shift. Boards are increasingly expected not only to oversee the company, but also to demonstrate that they themselves are functioning effectively.
In practice, this requirement sits alongside other recent enhancements to the Corporate Governance Code, including the board skills matrix, stronger expectations around risk management and internal control reviews, board diversity and nomination committee composition requirements, and greater emphasis on succession planning and board refreshment. Together, these provisions move the focus from static compliance towards ongoing board effectiveness and continuous improvement.
Practical Implications for Boards
Many listed companies have conducted informal or ad hoc board evaluations in the past. The new Code Provision raises the bar in several ways.
- Process discipline is now expected. Boards need a structured approach that can be clearly described in the Corporate Governance Report. Vague statements that a review was conducted will no longer be sufficient.
- Linkage with strategy and skills becomes essential. The review should assess whether the board's collective skills, experience, and ways of working remain appropriate for the company's strategy and the external environment. This makes the board skills matrix a practical tool rather than a disclosure formality, and boards should expect the two disclosures to be read together by investors and proxy advisers.
- Follow through matters as much as findings. Disclosure is expected not only on findings, but also on the actions taken or planned. Boards that identify issues but fail to act on them will face increasing scrutiny from investors and other stakeholders.
- Internal versus external reviews require a considered choice. The Code allows flexibility. An internal review may be appropriate in some cases, while an externally facilitated review can bring greater objectivity and candour, particularly for larger or more complex companies, or when significant change is underway.
What Boards Should Consider Doing
- Establish a clear policy and cycle for performance reviews, at least every two years and more frequently if the business is undergoing significant change, and decide the appropriate mix of internal and external reviews over time.
- Define the scope carefully, covering areas such as board composition and skills, culture and dynamics, quality of information, risk oversight, stakeholder engagement, and alignment with strategy.
- Ensure the process allows for candid feedback, with confidentiality protected throughout.
- Link findings to concrete follow up actions, including training, board refreshment, committee adjustments, or changes in board processes.
- Plan disclosure of the review process and the board skills matrix together, so the Corporate Governance Report tells one coherent story about board composition, review, and improvement rather than two disconnected disclosures.
- Make disclosure specific and meaningful rather than generic.
Looking Ahead
The board performance review requirement is part of Hong Kong's broader effort to strengthen board effectiveness and accountability. Boards that treat it as a periodic compliance exercise will miss the opportunity it presents. Those that use it as a genuine tool for reflection, alignment with strategy, and continuous improvement will be better positioned to meet rising expectations from regulators, investors, and other stakeholders.
In an environment of increasing complexity, including climate risk, geopolitical uncertainty, technological change, and heightened stakeholder scrutiny, the ability of the board to evaluate and improve its own performance is no longer optional. It is becoming a core element of good governance.
Edited / written by: Amanda Cheung, Founder, AMMO Group
