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Author: Stefan Schmierer, Managing Partner
Co-Author: Sabrina Lai , Summer Intern
Introduction
The Companies Ordinance (Chapter 622 of the Laws of Hong Kong) (CO), alongside with provisions of the companies’ own articles of association, govern the mode of holding general meetings of shareholders for in Hong Kong incorporated companies. In accordance with section 584 of the CO, a company may hold a general meeting in two or more locations using any technology that allows company members who are not in the same location to listen, speak, and vote at the meeting. In spite of that, the CO makes no mention of a corporation holding fully virtual general meetings or general meetings that are a combination of virtual and physical meetings.
A company may hold a general meeting in two or more locations using any technology that allows company members who are not in the same location to listen, speak, and vote at the meeting.
In view of the development of technology in electronic communication, the holding of virtual or hybrid meetings has become the norm for businesses. In order to expressly cater for the scenario of Hong Kong incorporated companies holding fully virtual or hybrid general meetings, the Hong Kong government has therefore modernized provisions of the CO and gazetted the Companies (Amendment) Ordinance 2023 (“the Amendment Ordinance) on 27 January 2023. The amended CO will come into effect on 28 April 2023, under which this will give ample time for companies to communicate with their members.
''In view of the development of technology in electronic communication, the holding of virtual or hybrid meetings has become the norm for businesses''
Virtual Meeting Technology
Under the Amendment Ordinance, a new definition of “virtual meeting technology” was introduced – “a technology that allows a person to listen, speak and vote at a meeting without being physically present at the meeting.” As such, companies have a greater flexibility to hold their general meetings:
At physical location(s);
As fully virtual general meetings without the requirement for presence of members at physical locations; or
In a hybrid mode of such virtual general meetings with some members attending at physical location(s).
It provides that, unless the company's articles clearly prohibit the holding of a general meeting by using virtual meeting technology or specify that a general meeting be held solely at a physical venue, the notice may identify the virtual meeting technology to be utilised for holding the meeting. Additionally, the notice must indicate the virtual meeting technology that will be utilized, only when a firm plans to hold a meeting completely or in part virtually.
It is advised that companies check their articles to see whether a fully virtual or hybrid general meeting is appropriate. Please take notice that, notwithstanding their articles, the Amendment Ordinance will permit companies to have general meetings through virtual meeting technology without modifying their articles:
Indicate a place or places for conducting general meetings and/or;
Contain a clause mandating that the location of a general meeting be specified in the notice of the meeting;
Require that a general meeting's notice to members or on its website include, among other things, information on the meeting's physical location, the technology to conduct it virtually, or both; and
Provide that 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.
''companies have a greater flexibility to hold their general meetings''
Conclusion
The Amendment Ordinance seeks to provide companies with the flexibility they need to manage their corporate affairs efficiently and effectively, while considering their specific needs and circumstances. With the new legislation amending provisions of the Companies Ordinance, members of Hong Kong incorporated companies could now participate in general meeting with the options of a physical, virtual or hybrid mode. It is the ultimate decision for the company in deciding the mode of meetings, in which the best interests of their members should be considered. For instance, companies should promote engagement with members and encourage their participation at meetings.
Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.
For specific advice about your situation, please contact:
Managing Partner
+852 2388 3899
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