The Hong Kong market has in recent years seen a number of listed companies having to go through the painful process of prolonged suspension of trading as a result of failure to publish their financial statements to the public in accordance with the timeframe prescribed in the Listing Rules.  A portion of these suspensions arose as a result of whistleblowing or anonymous complaints pertaining to potential irregularities in the listed companies’ financial statements, misconduct of senior management or other corporate misfeasance.  As a result of such complaints, the affected listed companies may be required to conduct internal investigations to address the issues arising from the complaints and undertake remedial measures before trading of the shares can be resumed.

How one handles whistleblowing or anonymous complaints will potentially have significant implications on the listed companies.  While it is debatable whether a prolonged suspension is a proportionate result of whistleblowing which may or may not be substantiated after an internal investigation, it is clear that potential misconduct or irregularities which affect the interests of public shareholders are often uncovered by whistleblowing.

Looking at things from a broader angle, whistleblowing is also one of the key ways for management to find out about potential wrongdoing or misconduct within an organisation, so that appropriate measures can taken to manage the risks arising before it is too late.

It goes without saying that in order to encourage a whistleblower who intends to make a report of suspected wrongdoing, one may need to give sufficient assurances and protection to a whistleblower (most notably, confidentiality and safeguards against retaliation).

An organisation may have its own whistleblowing policy offering protection to whistleblowers and establishing a process to handle whistleblowing or anonymous complaints.  In addition to such internal policies and procedures, one may also see if a whistleblower is offered any statutory protection, especially when whistleblowing takes place outside a specific organisation.

Compared to other jurisdictions, Hong Kong does not currently have a composite piece of legislation which is designed to provide a comprehensive scheme for whistleblower protection. Instead, the whistleblower protection in Hong Kong is scattered around various ordinances.

It can be foreseen that a reform to introduce a composite piece of legislation for whistleblower protection (whether or not this will happen) will not be an easy task, as any such legislation should balance between protecting whistleblowers from retaliation and blindly offering wide protection such that it invites frivolous and plainly unsubstantiated complaints. In addition to that, the legislation will have to take into account all the other existing protections that are offered to whistleblowers under various legislations.

Please see our article that sets out some examples that are relevant to Hong Kong’s regime on whistleblowing for more details.