KPMG has released the July 2014 issue of Hong Kong Capital Markets Update, which provides a snapshot of the key regulatory and corporate governance developments for the second quarter of 2014. In June 2014, The Stock Exchange of Hong Kong Limited (“the Exchange”) released a consultation paper seeking comments on the proposed changes to the Corporate Governance Code and Corporate Governance Report relating to internal controls. Respondents can provide written comments on or before 31 August 2014. In the same month, the HKSAR Government launched a three-month consultation on reforming the oversight of auditors of Hong Kong listed issuers. The consultation period will end on 19 September 2014 and legislative changes are expected to be introduced to the Legislative Council of Hong Kong in 2015. The Exchange also published new guidance on the application of the RTO rules and the use of contractual arrangements (aka VIE contracts) by listed issuers.