Annual General Meeting in Hong Kong
General Definition
An annual general meeting (“AGM”), as the name implies, is a statutory requirement where a company’s directors or shareholders will gather in this mandatory yearly meeting to discuss the company’s financial report, business performance or strategy. Just like many other jurisdictions, a Hong Kong company must hold the AGM on a yearly basis.
An AGM is a mandatory requirement for all companies (public and private limited) incorporated in Hong Kong. The following list contains the information typically expected in an AGM notice:
- Name of the company
- Date and time of the AGM
- Venue for the AGM (in person) and/or link for the video-/teleconference call
- A short meeting agenda, which may include the presentation of financial statements, (re)appointment of directors and the (re)appointment of auditors
- A more extensive agenda, which may include renewal of authorizations related to the company’s Employee Share Option Plan (ESOP), final dividends, and reserved matters for shareholders as per the company’s shareholders’ agreement (if any)
Why AGMs are a must
Apart from being a means for a company to share its financial results with its shareholders, an AGM is also an important platform for fulfilling two objectives: communication and compliance. The common denominator underlining these two objectives is a sense of trust. With AGMs, shareholders can gain insights into a company’s performance and how transparent the management team is, so they can make discerning investment decisions. On top of having the opportunity to pose questions or engage directly with the board, they would be privy to the company’s strategies and outlook moving forward – straight from the source.
Through AGMs, companies can be held accountable for their actions, not only to put their shareholders’ minds at ease, but also in the eyes of the law. According to the Companies Ordinance (“CO”), any Hong Kong company – listed or not – should hold an AGM; and none are exempted unless the company has yet to commence operations or became dormant during the year.
AGMs under the epidemic
The epidemic prevention measures may still impact a company’s ability to hold in-person meetings in Hong Kong, and even, for some shareholders and directors, to travel to Hong Kong. The good news is that virtual AGMs are allowed, providing all the shareholders can listen, speak, and vote in the meeting. While the circulation of written resolutions is a suitable alternative for compliance purposes, it does not tick the box for effective communication or shareholder engagement.
In conclusion, AGMs are not just held for complying with the provisions of the Companies Ordinance and the company’s articles of association or meeting the contractual obligations set out in shareholders’ agreements. By enhancing the compliance aspect with the benefits of communication, companies would also be able to involve shareholders in their growth and avoid potential misunderstandings that could degenerate into disputes down the line.
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