HKSI Paper 1 Business operations and practices question: Listing Rules cap on INED tenure

HKSI Paper 1Business operations and practices

Lion Peak Holdings Ltd, a Main Board issuer, has three INEDs: two have served since 2014 and one since 2023. Under the Listing Rules' cap on INED tenure, what must its board achieve by the conclusion of its first AGM held on or after 1 July 2028?

A Nothing yet, as the tenure cap applies only to INEDs first appointed on or after 1 July 2025
B INEDs who have served nine years or more must no longer be a majority of its INEDs
C Both INEDs appointed in 2014 must have left, as no INED may then have served nine years or more
D Its long serving INEDs may stay if independent shareholders separately approve their re-election

Show the answer and explanation

Answer: B. INEDs who have served nine years or more must no longer be a majority of its INEDs

Main Board Rule 3.13A (in force from 1 July 2025) bars a board from including an INED who has served nine years or more, and Note 1 phases this in. By the conclusion of the first AGM held on or after 1 July 2028, long serving INEDs must not be a majority of the INEDs; by the first AGM held on or after 1 July 2031, none may remain. Lion Peak has two long serving INEDs out of three, so one must step down or be re-designated a non-executive director by the 2028 AGM. Removing both is the phase-two test for 2031. An independent shareholders' vote is not an exemption from the cap; HKEX did not adopt that approach. Tenure is counted from the original appointment, so INEDs appointed before July 2025 are caught. Source: Main Board Listing Rule 3.13A and Note 1 (effective 1 July 2025); HKEX Consultation Conclusions on Review of Corporate Governance Code and Related Listing Rules (December 2024) paras 128-131 (as at October 2026).

Common mistake

Candidates jump to the final 2031 position (no long serving INEDs at all) and forget the 2028 phase only requires them to stop being a majority.

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Related HKSI Paper 1 questions

Mr Fung is an INED of four Main Board issuers, an executive director of one GEM issuer and an INED of a company listed only in Singapore. In 2029 a fifth Main Board issuer invites him to become its INED. Under Main Board Rule 3.12A, may he accept?Ms Chen joined the board of a Main Board issuer on 2 March 2026. She has never been a director of a Main Board or GEM issuer, but until December 2025 she was a director of a Nasdaq-listed company. What minimum training must she complete under the Listing Rules?Mr Siu was an INED of a Main Board issuer from June 2015 to June 2021, left for two years, and was re-appointed in June 2023. Under Main Board Rule 3.13A, which of the following statements are CORRECT?

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