Hong Kong Annual Meeting Requirements

As the name means, an annual general meeting (‘AGM’) is a constitutional obligation that a company’s directors or shareholders will gather at this required annual meeting to review the financial statements, corporate results, or plan of the company. Like many other jurisdictions, the AGM has to be held annually by a Hong Kong corporation. The new Companies Ordinance (‘CO’) established that a corporation was forced to convene an AGM in Hong Kong (Holding AGM in Hong Kong) for each of the company’s financial years rather than for each of its calendar years. In the current CO, the accounting date period is used to assess the period during which to prepare a company’s financial statements

Specifically, the AGM of a business shall take place within the following period:

This refers to a company limited by guarantee or a commercial company that is not a part of a public company, 9 months after the accounting comparison period expires.
This extends to every other organization 6 months after its accounting comparison period expires.

If the accounting reference period of the company is the first accounting reference period of the company and extends 12 months, the AGM of the company shall be kept within the following period:

The AGM must be conducted 9 months after its first anniversary or 3 months after the conclusion of the accounting comparison period (whichever is later) in the case of a corporation limited by guarantee or a private company which is not a division of a public company.
The AGM must be kept for every other company 6 months after the company’s first anniversary of incorporation; or 3 months after the close of the accounting reference period (whichever is later).

As per section 584 of the new CO, with the help of communication protocols, a corporation may hold its general meeting at two or more sites, enabling participants who are not physically present together at the same place to listen, talk and vote at the meeting (subject to the clause of its articles).

Keeping Annual General Meeting Exemptions (AGM)

The new CO also set out the circumstances which exclude a business from AGM holding:

Under section 612(1), a corporation is exempted from having an AGM if by written resolution, all that may be accomplished at the AGM is completed and copies of the documents needed to be laid down or created at the meeting are distributed to each director of the company on or before the date of distribution of the written resolution.
A single-member corporation would not need to conduct an AGM under Section 612(2)(a).
Under Section 613, utilizing a written resolution or a resolution at a general meeting adopted by all shareholders, a corporation may dispense with the keeping of AGMs.
A dormant corporation is removed from the obligation to conduct AGMs, as per Section 611

Annual General Meeting Notice (AGM)

A company shall provide its members with a notice period of at least 21 days (in any other case, the notice period for a limited company shall be at least 14 days and the notice period for an unlimited company shall be at least 7 days). A longer duration of notice can include the company’s articles of association.

In the case of an AGM, a meeting must be held within 21 days by notice (as stated in section 571(1)(a)), providing that all members entitled to attend and vote at the meeting have agreed to do so (section 571(3)(a)). In the case of every other conference, the meeting must be called by notification of fewer than 14 days (in the case of a restricted company) and 7 days (in the case of an unrestricted company), as appropriate (see section 571(1)(b)), if the majority of the participants entitled to participate and vote at the meeting so accept, becoming a majority together comprising at least 95% of the overall voting rights of all of me.

A general meeting of the corporation shall be considered to have been properly called if in the case of an AGM, all the members entitled to attend and vote at the meeting agree on a notice period of longer than 21 days (section 571(3)(a)); and in the case of any other meeting, a shorter notice period is thereby decided by a majority of the total of the members entitled to attend and vote at the meeting.

Proxies: Responsibilities and Obligations

A proxy refers to a person who on behalf of a member of the firm, attends an AGM and votes. Both members (including members of a corporation limited by guarantee who if provided for in the Articles under the current regime, are entitled only to nominate proxies) have the constitutional right to appoint a proxy.

The new CO has laid down a series of new proxy appointment rules:

The right to nominate another person as a proxy extends to all corporations in compliance with section 596(1).
Section 596(2) specifies that by its terms, a company limited by guarantee can confine proxies to members of the company only.
In the case of a corporation with equity ownership, Section 596(3) permits the assignment of several proxies.
Section 598 points out that when a poll is ordered, a notice time must be specified for a proxy appointment.
Section 599 provides for the appointment and removal of a proxy to be submitted by electronic means to the corporation.
Section 601 states that a proxy instrument provided by a corporation shall authorize the participant to advise the proxy to vote in favor of or against each motion.
As per section 608, a company’s articles can give its members or proxies a more comprehensive rights institutional right to appoint a proxy.

New Rules introduced under the new CO for proposing and passing a written resolution

If a company has issued petitions from members representing not less than 5% of the total voting rights or a lower percentage stated for the reason of the company’s papers (section 552), it shall circulate a requested written resolution to all members who are entitled to vote.
A member proposing a written resolution may require the organization to circulate a declaration on the subject of the resolution not exceeding 1000 words (section 551).
If the Court is convinced that the right is being violated or used to secure undue attention for defamatory matters, a corporation is not obliged to circulate the declaration (section 554).
The dissemination of copies can take place by sending them in hard copy or electronic form or by making them available on a website (section 553). Members may adhere to the proposed written resolution and return it either in hard copy or electronic form to the organization (section 556).
The time during which the proposed written settlement is agreed shall be 28 days or the period stated in the company’s papers (section 558).
When a resolution is passed as a written resolution, the company shall, within 15 days (section 559), give a note of that fact to each member and the auditor of the company.
Alternative mechanisms for adopting a resolution without a conference can also be laid down in the articles of a corporation, given that the resolution has been agreed by all the members entitled to vote (section 561).

The Statutory Procedures

If the company’s articles provide for procedures for a resolution to be passed without a meeting and the provisions in the articles conform with sections 561(2) and (3), the company may pass a resolution in compliance with certain provisions in the articles. These clauses in the papers are not affected by the regulatory procedures
However, please notice that section 561(1) states that the clause of the papers of a corporation is invalid to the degree that it would have the effect that a proposal may not be proposed and accepted as a written resolution. When according to section 549, a written proposal is properly proposed by the directors or a member of the board, the company is expected to comply with all statutory procedures.

Changes in member’s resolutions and statements

Under section 115A of the old Companies Ordinance (Cap. 32) (‘the old Ordinance’), members of a company meeting a certain level may order the company to circulate, at any general meeting, a proposed resolution for the next AGM or a statement of not more than 1000 words concerning any proposed resolution or business to be dealt with. The corporation is not bound to circulate a resolution under which the Court is convinced that the right to secure unnecessary attention for defamatory matters is being violated. If the organization resolves differently, participants making the requisition tend to pay the circulation costs.

Under the new CO, sections 582, 615, and 616 specify that the costs of the proposed resolution of the circulated members at the AGM and the statements of the members relating to the proposed resolution or business to be dealt with at the AGM shall be borne by the corporation, provided that the requested threshold for proposals for the dissemination of the proposed resolution is obtained by the company not less than 6 weeks before the date of the proposed resolution. The conditions for not requiring the dissemination of the declaration of the members are also altered to the degree that, at the request of the corporation or of an individual pretending to be aggrieved, the Court is convinced that there is an infringement of the right to compel circulation or that right is used to gain undue attention for defamatory matters (section 583).

Company Records

The minimum term for records of former members shall be 10 years from the date on which the person ceases to be a member of the organization (section 627(5)). The term shall be at least 10 years from the date of the resolution, meeting, or decision (section 618(2)) concerning the reports of motions and meetings of members and written records of decisions of a sole member corporation.

The registrations may be held at the company’s registered office or a location prescribed by the Company Documents (Inspection and Supply of Copies) Legislation (Cap. 622I) (sections 641(3) and 648(3)). A spot in Hong Kong is the position prescribed by the Law.

Data surrounding a shadow director shall no longer be required to be included in the registry of directors under the current CO.

“If the company secretary is a normal citizen, the provision in the old Registry Ordinance to include the “ordinary residential address” of the company secretary is supplemented by a requirement to contain the communication address of the company secretary (section 650(1)(a)).

Company Records (Inspection and Provision of Copies) Regulation (Cap. 622I) (“CR(IPC) Reg”)

The CR(IPC) Reg requires company records to be held at any location in Hong Kong where, under the applicable provisions of the new CO (e.g. section 628 of the Registry of Members), the form of company record can be kept at a location prescribed by the regulations provided for in the new CO in section 356 to 657.

In contrast to the range of $1 to $2 under the old Ordinance, the inspection fee, which typically applies if the claimant is not a director of the organization, has been standardized at $50.

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