On 28 April 2023, the Companies (Amendment) Ordinance 2023 (the “Amendment Ordinance”) came into operation in Hong Kong, modernising the mode in which annual general meetings (“AGM”) or general meetings (“GM”) of companies are held. The Amendment Ordinance only applies to locally incorporated companies.
Generally speaking, a company must hold an AGM within a specific prescribed time each year. For instance, a private company must hold an AGM within nine months after the end of its accounting reference period. A company has the option to hold a GM as is necessary. The manner in which AGMs or GMs are to be held are stipulated in Part 3 of the Companies (Model Articles) Notice (Cap. 622H) (“Model Articles”) or the company’s own articles of association (“AOA”).
Prior to 28 April 2023, the Model Articles did not provide for the possibility of holding AGMs or GMs virtually. Furthermore, section 584 of the Companies Ordinance (“CO”) only stated that a company may hold a GM at two or more places using any technology that enables the members of the company who are not together at the same place to listen, speak and vote at the meeting.
Set out below are the key changes/clarifications in the Amendment Ordinance:-
- “Virtual meeting technology” means a technology that allows a person to listen, speak and vote at a meeting without being physically present at the meeting [See Section 547(1) CO].
- A notice of a general meeting to members (or on a website) must specify, among other matters, the physical venue of the meeting or the virtual meeting technology to be used for holding the meeting, or both [See Section 573(2) CO, 576(1) and (2A)].
- A notice may specify the virtual meeting technology to be used for holding the meeting unless the company’s AOA expressly preclude the holding of a general meeting by using virtual meeting technology or require a general meeting to be held only at a physical venue [See Section 576(1) and (2A) CO].
- A company may hold a fully physical, a fully virtual, or a partially physical and virtual GM [See Section 538A CO].
- When a general meeting of a company is held at two or more physical venues, the company must use any technology that allows the members of the company who are not together at the same physical venue to listen, speak and vote at the meeting regardless of whether virtual meeting technology is also used for holding the meeting [See Section 584(1) CO].
- A person who attends a general meeting by using the virtual meeting technology specified in the notice of the meeting is to be regarded as being present [See Section 585(4A) CO].
Similar changes were also made to the Model Articles.
It is worth noting that in situations where the company’s AOA (1) stipulates that the notice of a GM must specify the physical venue of the meeting, and/or (2) refers to a place for conducting a GM, a company does not need to amend its AOA before benefitting from the Amendment Ordinance. If companies are in doubt about the practical implementation of virtual GMs, they may refer to the Companies Registry’s “Guidance Note – Good Practice on Holding Virtual or Hybrid General Meetings”.
Since the Covid-19 pandemic, businesses have been forced to modernise their mode of operations by holding virtual meetings regularly, moving their database online and working from home. One of the many takeaways from the perspective of businesses is the assurance and understanding that a company can still function even when running on non-traditional modes. It is good to see that Hong Kong’s legislation is gradually embracing modern technology, albeit in a small way.
If you need assistance with corporate governance in Hong Kong, please contact us today.