Introduction
To keep pace with technological advancement in electronic communication and to make the laws more relevant to current business environment, amendments to the Companies Ordinance (“CO”) and the Model Articles have been introduced under the Companies (Amendment) Ordinance 2023 (“Amendment Ordinance”) to allow companies to hold their general meetings (i) at physical location(s) in the traditional way; (ii) as fully virtual general meetings without requiring the presence of members at any physical location in the most technology-savvy way; or (iii) in a mixed mode of such virtual general meetings with some members attending at physical location(s), i.e. hybrid general meetings. The Amendment Ordinance has come into operation on 28 April 2023.
The new law applies to Hong Kong public companies limited by shares, private companies limited by shares and companies limited by guarantee. This eNews aims to set out some salient points about holding virtual or hybrid general meetings in Hong Kong.
Pre-conditions
Section 576(2A) of the CO has been amended to state that a notice of a general meeting of a company may specify the virtual meeting technology to be used (whether or not the notice also specifies the physical venue of the meeting). “Virtual meeting technology” is defined as a technology that allows a person to listen, speak and vote at a meeting without being physically present at the meeting (s547(1) of CO).
Before a company can rely on the new law to hold a virtual meeting, it should ensure that its articles do not contain the following provisions :-
(a) expressly preclude the holding of general meetings by using virtual meeting technology; or
(b) require general meetings to be held only at a physical venue.
It has been clarified in the new law that a company’s articles requiring a notice of a general meeting to specify the physical venue of the meeting is not in itself requiring a general meeting to be held only at a physical venue (s576(2A)(b) of CO).
Matters to consider for holding a virtual meeting
1. Companies should consider whether a fully virtual meeting is the suitable mode
As said, under the new law, companies may hold a general meeting at a physical venue (ie a physical meeting), by using virtual meeting technology (ie a fully virtual meeting), or both at a physical venue and by using virtual meeting technology (ie a hybrid meeting) (s583A of CO).
In considering whether a fully virtual meeting is suitable, companies may assess their own situation, their member base and profile and resource restraints. When deciding the mode of the general meeting, companies should take into account the best interests of their members and aim to promote engagement with members and encourage participation from members. The mode of meeting should clearly not be a means of managing attendance or limiting the ability of members to participate in meetings and raise questions.
2. Virtual meeting technology to be used
Companies should determine the virtual meeting technology to be used. The new law does not mention the detailed specifications or features of the technology required but requires that such technology allow the companies’ members who are not together at the same physical venue to listen, speak and vote at the meeting (s584(1) of CO).
In choosing the technology, the Guidance Note of the Companies Registry advises the companies to consider cost, the number of attendees, length of the meeting and the features facilitating the presentation, participation, access of participants, verification of identity of participants and voting.
3. Contents of the Notice
As there will be no physical venue for a fully virtual meeting, section 576(1) of the CO states that notice of such meeting should specify the virtual meeting technology to be used for holding the meeting.
4. Despatch of Notice of General Meeting
The notice of the general meeting must be given to members in hard copy, electronic form, by making it available on a website, or by a combination of methods (s572 (1) of CO). If a company has provided an electronic address in a notice for calling a meeting, it is regarded as having agreed that any document or information relating to the proceedings at the meeting may be sent electronically to the company.
The Guidance Note advises that for documents that are required to be provided or laid before a general meeting (e.g. proxy forms, the financial statements of the company, etc.), subject to the provisions of the CO, it is good practice to send such documents together with the notice of the meeting. Companies should consider using electronic communication as far as practicable (if so permitted under Part 18 of the CO and the companies’ articles) so as to facilitate members’ timely access to the documents and information relating to the general meeting.
5. Conduct of Meeting
Registration stage : To ensure that a virtual meeting can commence efficiently, members should be provided with the relevant information for registration and authentication prior to the meeting.
Counting the quorum : Section 585(4A) of the CO provides that person attending a general meeting by using the virtual meeting technology specified in the notice of meeting is regarded as being present and should be counted towards a quorum.
During the meeting : Companies should ensure that members are able to listen, speak and vote using the virtual meeting technology as if the meeting was a physical meeting.
Question time : The technology used should allow members to submit real-time questions either orally or by typing. It is good practice for companies to allow members reasonable time to submit questions prior to the general meetings.
Conclusion
The new law has provided the legal framework for the holding of virtual or hybrid general meetings by Hong Kong companies. It allows more flexibility but also brings about additional compliance for companies to avoid the meetings or resolutions passed being challenged. Companies are advised to review their articles of association to see if any of the express restrictions apply to them. Also if the holding of virtual or hybrid general meetings are preferred, all meeting notices and procedures should be carefully reviewed to ensure due compliance.
If you have any questions on the above eNews or relating to any companies law matters, experienced lawyers in our firm would be happy to assist you.