How to Hold an Annual General Meeting in Hong Kong?
It is vital to know how to organize a good Annual General Meeting (AGM). This is because annual meetings bring together management and shareholders in a powerful way. Shareholders may voice their opinions on major topics and have a chance to interact with the company’s leadership during the annual meeting. Keeping them in order creates a precedent for the company’s leadership.
Whether the meeting will be held virtually or in person has a significant impact on the logistics of the event. Some procedures must be followed to host an annual general meeting in Hong Kong. This article will offer you a comprehensive idea about AGM and how to hold it in Hong Kong.
Annual General Meeting (AGM) in Hong Kong
Evaluation of employee performance is essential to the success of any business. In that sense, Annual General Meetings (AGMs)are crucial because of the transparency, the potential to incorporate shareholders, and the focus they place on responsibility – all of which are critical for all business management. The process involves looking at the company’s financial performance, addressing any important changes or issues, and establishing new long-term objectives. Read on to know more about them in detail.
What is AGM?
An Annual General Meeting (AGM) is a yearly assembly of companies and their shareholders. Resolutions and business issues are discussed and addressed by the board of directors and the shareholders at the meeting. Business entities in Hong Kong, like those in many other countries, are required by law to convene an annual meeting of shareholders.
According to the new Companies Ordinance, all Hong Kong-based corporations are required to have their annual general meetings in the city at least once per year. Post the pandemic, shareholders may participate in an annual meeting also via online conferencing services. However, it is the company’s responsibility to guarantee that all shareholders have equal access to the meeting’s proceedings.
Purpose of AGM in Hong Kong
A mandatory annual general meeting must be held within nine months after the conclusion of the accounting reference period. This applies to private companies that are not subsidiaries of public companies, as well as companies limited by guarantee. The AGM of other businesses must be held no later than six months following the end of the firm’s accounting period. The purpose of the annual general meeting in Hong Kong is to review and resolve crucial business issues. The following are a few aspects brought to discussion during an AGM.
- The board approves or expresses views over the company’s financial statements
- The board members get elected during the meeting
- Potential amendments to the company’s bylaws are discussed
- Discussions about unlawful activities that happened in the year are made
- A review of the auditors’ reports happens
- Other issues that may emerge during the meeting are addressed
Key Requirements of AGM in Hong Kong
Shareholders have a significant chance to exert their rights and control over the firm at the annual general meeting. Additionally, it gives investors an opportunity to talk about the company’s performance and future prospects with the directors and management. Remember that all required paperwork must be distributed to members prior to the AGM’s commencement.
A minimum of 21 days notice must be provided to shareholders, and the meeting must take place no later than six months after the conclusion of the company’s fiscal year. As part of the requirements of AGM in Hong Kong, the following must be included in the notice.
- Company name
- Venue of the meeting
- Objectives of the meeting
- Overview of the issues and solutions to be discussed in the meeting
- Directors’ names and contact information
- Time limit offered to shareholders to clarify their queries
- Any essential information/ pointers for discussion
- Identity and contact details of the company secretary
How to Hold Annual General Meeting in Hong Kong
It takes careful planning and adherence to regulations, to conduct a successful and legally compliant AGM. Essentially, the processes resemble director meetings. According to the company’s articles of incorporation, quorum requirements must be met at both board meetings and annual general meetings. Instead of every calendar year, the new Companies Ordinance now requires that a business have an AGM in Hong Kong for each of its fiscal years.
According to the new CO, the accounting term is employed to determine the deadline for preparing a company’s financial statements. If you want your annual meeting to be effective, follow these suggestions.
Convene and Hold a Board Meeting
Prior to organizing the Annual General Meeting (AGM), it is important to hold a board meeting to discuss and set the tone for AGM. For this, the review of auditors’ and directors’ reports must be done with reference to every financial statement of the company. The shareholders’ dividend recommendation can also be done at this stage. If there has been any reappointment of auditors, their compensation must be defined. The same applies to the compensation allocation of the new directors. They must also be notified of their duties to allot, repurchase, or reissue shares.
Write Up the Minutes of the Board Meeting
It is important to write and document the minutes of the meeting. The chairman of the company must verify and sign the document before passing them on to directors for reference.
Despatch the Notice of the AGM and the Audited Accounts to the Shareholders
The shareholders must be notified of the company’s plan to hold an annual general meeting in Hong Kong. The notice should reveal the date, venue and time of the AGM. Also, it must have the meeting agenda and the crucial resolutions that may be passed during the meeting. This must be circulated to the shareholders.
Hold the AGM
Ensure to conduct the Annual General Meeting (AGM) according to the agenda. The directors and auditors must present the year-end reports and the members shall receive them. The allocation of dividends to the investors/ shareholders must be discussed. If any of the directors are retiring, a reelection must take place and fix their compensation. In cases where the auditors need to be reappointed, their package must also be defined. Other grievances or insights regarding the company’s growth, if any, take place next. Finally, resolutions urging the directors to process shares must be done.
Write Up the Minutes of the Meeting
The minutes of the Annual General Meeting (AGM) must be written just like the board meeting. After the chairman approves the document with his signature, it can be circulated among the shareholders.
Key Considerations of the Annual General Meeting
The procedures for holding an annual meeting in Hong Kong may look relatively simple. However, there are certain factors that you must consider. These include legal compliance in terms of the exemption, AGM dispensation and rights and obligations of the members involved. They are explained in the passages below.
AGM Exemption in Hong Kong
In certain cases, businesses are excluded from the need to convene an AGM in Hong Kong. However, it is the company’s responsibility to follow the law in every other respect. The following conditions make a company eligible for exemption.
- There is no need for an annual meeting if your business has just one shareholder. The need for an annual meeting may be waived if the board of directors can submit a resolution or proposed resolution that has been adopted by a majority of the members eligible to vote on it. Remember the resolution needs the approval of the director and shareholders.
- There is no need for an annual meeting to be held if the corporation is inactive.
- The firm does not have to have an annual meeting if all business that would normally be conducted there can be done by a written resolution instead.
In the event that you are unable to attend the annual general meeting, you may select a substitute to represent your interests. This delegate is expected to be a corporate director or shareholder. By using a mandatory form as required by law, you may also vote by proxy.
Dispensation of AGM in Hong Kong
A company is permitted to waive the need to conduct an Annual General Meeting (AGM). This is called the dispensation of AGM. A dispensation is granted when all stakeholders agree to a change in the rules, either in writing or in a meeting. All reports and statements needed to be placed before an AGM must still be distributed to members by the corporation.
Notice of AGM
In most cases, a corporation must provide its shareholders with at least 21 days’ notice. The notice time for a limited business must be at least 14 days, whereas the due for an unlimited company must be at least 7 days. An extended notice time may be required for the company’s articles of association.
The Rights and Obligations
The Companies Ordinance of Hong Kong has framed new rights and obligations for companies to appoint proxies. The regulations according to their sections are briefed below.
- Companies can appoint a representative as a proxy (596-1)
- Only the members of the company can serve as proxies in companies limited by guarantee (596-2)
- If a company has share capital, it can have multiple proxies (596-3)
- In certain cases where the appointment of a proxy demands an election, a notice period must be defined (598)
- A proxy can be appointed or terminated electronically (599)
- The proxy instrument can be used to direct the proxy during a voting session or discussion (601)
- The members and proxies can enjoy more elaborative rights as per the company’s articles (608)
Start and Manage Your Hong Kong Company with Startupr!
Annual General Meetings (AGMs) play a vital role in maintaining the success and reputation of a company. Although there are options to conduct them physically, virtually or in a hybrid way, it can be stressful to keep track of the reports and statements.
At Startupr, we have a team of professionals who can guide you right from incorporating your company to managing your financial records. We also assist with company restructuring if you need a change of directors or shareholders and offer renewal services at an affordable rate. If you want to have your doubts cleared, we can connect on a call right away!