Hong Kong Company Shareholders' Meeting and Written Resolutions
Under the Hong Kong Companies Ordinance, the general rule in respect of shareholders’ meeting is that every company is required to hold a general meeting as its annual general meeting every year, and not more than 15 months shall elapse between the date of one annual general meeting of the company and the next. Any other shareholders’ meetings are normally called Extraordinary General Meeting (or EGM).
However, if the company holds its first annual general meeting within 18 months of its incorporation, then it need not hold it in the year of its incorporation or in the following year. For example, if a company is incorporated on 28 December 2012, it does not need to hold an AGM on or before 31 December 2012. It’s got 18 months’ time from 28 December 2012 to hold its first AGM. In other words, the company can hold its first AGM on or before 28 June 2014.
Other than the requirements imposed by the Companies Ordinance, the articles of association of a company may contain provisions governing the management and administration of the company. There are two kinds of meetings in the course of management of a company, namely shareholder’s meeting and director’s meeting.
In this article, we will discuss the key provisions relating to the general meetings and shareholders' written resolutions under the Hong Kong Companies Ordinance (the “Ordinance”, Cap. 622).
1. Types of Shareholders’ Meetings
(1) Annual General Meeting (AGM)
AGM is held annually for ordinary business such as adopting audited accounts, declaring dividends, electing directors and appointing auditors and fixing their remuneration.
(2) Extraordinary General Meeting
It is held as required to transact special business other than ordinary business, e.g. change of company name.
2. Time for Holding AGM
The New CO requires every private company to hold its annual general meeting in respect of each financial year within 9 months after the end of its accounting reference period (ie end of the financial period) and have its audited financial statements in respect of that accounting reference period laid before the members in that annual general meeting.
A company is not required to hold an annual general meeting if:-
(1) Everything that is required to be done at the meeting is done by a written resolution and copies of documents required to be laid at the meeting are provided to each member on or before the circulation date of the written resolution. (ie pass a written resolution in lieu of annual general meeting, the provision provided under Cap 32.) OR
(2) The company is a single member company OR
(3) The company has dispensed with the holding of annual general meeting by a resolution passed by all members which has not been revoked by ordinary resolution nor a request for convening an annual general meeting for a particular financial year has been made by a member of the company not later than 3 months prior to the deadline for holding an annual general meeting for that financial year. (Such resolution has to be delivered to the Registrar of Companies for registration)
2. Formalities of Shareholder’s Meeting
(1) Notice of general meetings
Except for annual general meeting ("AGM"), the notice period for calling a general meeting of a limited company (regardless of whether an ordinary or a special resolution is proposed at such meeting) or a meeting for the passing of resolutions requiring special notice has been shortened to 14 clear days. The notice period for calling an AGM remains the same (i.e. 21 clear days).
Besides, a company may give members a notice of meeting by making it available on its website from the date of such notification to the conclusion of the meeting.
(2) Electronic general meetings
Subject to the company's Articles of Association ("Articles"), a company may hold a general meeting at multiple locations by using electronic technology which enables members at different locations to listen, speak and vote at the meeting. A company may set out rules and procedures for holding a dispersed meeting in its Articles.
(3) Right to demand a poll
The threshold requirement for members to demand a poll in general meetings is reduced from 10% to 5% of total voting rights. Further, a chairman of the general meeting is empowered to demand a poll under the New CO.
(4) Rights and obligations of proxies
All members (including members of a company limited by guarantee, who are only entitled to appoint proxies if provided for in the Articles under the current regime) may appoint proxy. Further, unless the Articles provide otherwise, a member may appoint more than one proxy, instead of two under the current regime.
A proxy may demand a poll. In addition, subject to the provisions of the Articles, a proxy may vote on a show of hands (except for multiple proxies who can only vote on a poll) or be appointed as a chairman of the meeting.
A proxy is required to vote in accordance with the way specified in the appointment of the proxy. Should the appointor attends the meeting in person and exercises his or her voting right, the proxy will be revoked.
(5) Expenses of circulating the members' statements
Members of a company are no longer required to bear the expenses of circulating the member's statement that relates to a resolution or other business at an AGM, provided that such statement is made by a member representing no less than 2.5% of the total voting rights or from 50 members having the rights to vote at the meeting. Further, such notice should be received by the company within the required time. In such case, the expenses shall be borne by the company.
(6) AGMs
Accounting reference period is a new concept brought by the New CO, which sets out the time interval by which a company's financial statements are to be prepared. For all private companies and companies limited by guarantee, they are required to hold their AGMs within 9 months of the end of their accounting reference periods. For other companies, they are required to hold their AGMs within 6 months of the end of their accounting reference periods.
3. Dispensation of AGMs
A company is empowered to dispense with the requirement for holding of AGMs by passing a written resolution or a resolution at a general meeting by all members. After passing such resolution, a company is not required to hold any AGM for the financial year(s) to which the resolution relates. Having said that, the company is still required to provide all documents that are required to be laid before an AGM (e.g. financial statements, directors reports and auditors reports) to the members.
Having said that, any member may request the company to convene an AGM for a particular year by serving a notice no later than 3 months prior to the last day that the company would otherwise be required to hold an AGM for the relevant financial year. In addition, a company may revoke such resolution by passing an ordinary resolution to that effect.
A single member company is not required to hold AGMs at all. However, such company still needs to send all documents required to be laid before an AGM to its sole member.
4. Members' written resolutions
The New Companies Ordinance provides a comprehensive set of statutory rules regarding the necessary procedures for proposing, passing and recording written resolutions.
Any member or director of a company may propose a resolution as a written resolution (except for removal of a director or an auditor). Upon receipt of a proposed resolution, the company should circulate the same to all members if such request is sent out by a director, a member of not less than 5% of the total voting rights or a lower threshold set by the company in its Articles. Unless the Articles provide otherwise, the proposed resolutions should be agreed by all eligible members within 28 days. After passing the written resolutions, the company is required to send a notice of that fact to each member and its auditor within 15 days.
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