Jurisdiction - Hong Kong
Reports and Analysis
Hong Kong – Calling And Holding A General Meeting Of A Private Company Or Unlisted Public Company.

29 September, 2014

 

Legal News & Analysis – Asia Pacific – Hong Kong – Corporate/M&A 

 

In this Practice Note written by Nick Chan, partner at Squire Patton Boggs, we summarise the law and practice in relation to calling and holding a general meeting of a private company or an unlisted public company under the Companies Ordinance (Cap 622).

 

Statutory Notice Provisions


The default notice provisions under Section 571(1) of the new Companies Ordinance (Cap 622) (CO) are:

 

  • annual general meetings must be called by notice of at least 21 days
  • any other general meeting must be called by notice of:
    • at least 14 days if the company is a limited company and
    • at least 7 days if the company is an unlimited company

A company is permitted to lengthen the default minimum notice periods for general meetings in its articles of association (CO, s 571(2)).


Short Notice


CO, s 571(3) provides that a general meeting may be called on shorter notice upon the agreement of all the members entitled to attend and vote at the meeting in the case of an annual general meeting, otherwise a majority in number of the members having the right to attend and vote at the meeting, being a majority together representing at least 95% of the total voting rights at the meeting of all the members.


Special Notice

 

  • Special notice will be required for resolutions that propose to (CO, ss 360 and 578):
  • make the company fall within the reporting exemption for the financial year (CO, s 360(5))
  • appoint a person as auditor in place of a specified incumbent (CO, s 400(1)(a))
  • appoint a specified incumbent as auditor if that incumbent holds office by virtue of an appointment by the directors to fill a casual vacancy (CO, s 400(2))
  • where the directors have not filled a casual vacancy in the office of auditor after one month, appoint a person to fill the casual vacancy (CO, s 403(3))
  • remove a person from the office of auditor (CO, s 419(2))
  • remove a director (CO, s 462(4)(a)) and
  • appoint somebody in place of a director removed at the same meeting (CO, s 462(4)(b))

If special notice of a resolution is required, the resolution is not effective unless notice of the intention to move it has been given to the company at least 28 days before the meeting at which it is moved (CO, s 578(1)). 


If practicable, the company must give its members notice of the resolution at the same time and in the same manner as it gives notice of the meeting. If not practicable, the company must give its members notice of the resolution at least 14 days before the meeting, either by advertisement in a newspaper circulating generally in Hong Kong or in any other manner allowed by the company’s articles (CO, ss 578(2) and (3)).


If a meeting is called 28 days or less after a special notice has been given, the notice is regarded as having been properly given, though not given within the time required (CO, s 578(4)).

 

 

Notice Content Requirements


The notice of general meeting must specify (CO, s 576(1)):

 

  • date, time and place of the meeting 
  • general nature of the business to be dealt with
  • in the case of an annual general meeting, that the meeting is an annual general meeting and 
  • if a resolution is intended to be moved at the meeting, notice of the resolution and, where the company is not a wholly owned subsidiary as defined in CO, a statement containing information that is reasonably necessary to indicate the purpose of the resolution

The notice must also include a statement with reasonable prominence informing the member of (CO, ss 596 and 597):

 

  • his or her right to appoint another person (whether a member or not) as a proxy to exercise all or any of the member’s rights to attend, speak and vote at a general meeting of the company
  • where the company has a share capital, the possibility of appointing separate proxies to represent the number of shares held by the member as specified in his or her instruments of appointment and
  • where the company is limited by guarantee, the possible requirement under the company’s articles that a proxy must be a member of the company

Sending The Notice Of General Meeting


Notice of a general meeting of a company must be sent to every member, every director and every auditor of the company (CO, ss 574 and 575). No other person is entitled to receive notices of general meetings. Notice must be given in hard copy or electronic form, or by making the notice available on a website (CO, s 572).


Where a notice of a general meeting is made available on a website, the notice must (CO, s 573):

 

  • state that it concerns a notice of a company meeting
  • specify the place, date and time of the meeting and
  • in the case of an annual general meeting, state that it is an annual general meeting

The notice must be available on the website until the conclusion of the meeting.


Holding The General Meeting


Quorum of a general meeting of a company is (CO, s 585):

 

  • where the company has one member, the member present in person or by proxy
  • where a member is a body corporate, the member present by its corporate representative
  • two members present in person or by proxy, subject to the first point above and the provisions of the company’s articles

Chairperson


A member may be elected chairperson of a general meeting by a resolution of the company passed at the meeting, subject to any provision of the company’s articles stating who may or may not be chairperson (CO, s 586). A company’s articles will usually state that the chairman of the company will act as chairman of a general meeting if present and willing; otherwise another director of the company will be appointed (Companies (Model Articles) Notice (Cap 622H), Sch 1, art 44 and Sch 2, art 40).


Voting


A vote will be held on a show of hands unless a poll is demanded in accordance with statute and any specific provisions in the company’s articles (CO, s 588). In practice, many companies use poll voting rather than voting on a show of hands because poll voting:

 

  • avoids disruptive shareholder behaviour that may manipulate the result of a vote on a show of hands
  • leads to a definite and accurate result
  • is seen as more transparent, as shareholders’ votes are counted according to shares held and
  • more democratic than voting on a show of hands, where the votes of minority shareholders could frustrate those of majority shareholders, and the votes of absent shareholders are not counted

On a poll taken at a meeting, a member entitled to more than one vote need not use all of his or her votes, nor cast all the votes in the same way (CO, s 593).


Auditor’s Rights


A company’s auditor has the right to attend and be heard at any general meeting on any part of the business of the meeting which concerns him or her. Where the auditor is a firm or body corporate, the right to attend or be heard is exercisable by a natural person authorised by the firm or body corporate to act as its representative at the meeting (CO, s 411).

 

This article was supplied by Lexis Practical Guidance.

 

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For more information on Lexis Practical Guidance, please click here.

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