How Companies May Conduct AGMs During the COVID-19 Pandemic
The COVID-19 pandemic presents a lot of risks for companies in holding important meetings. People are supposed to avoid social groups, public gatherings, and large business activities. With that, meetings could not be held due to gathering regulations and travel restrictions.
For example, in Hong Kong, meetings in public locations composed of more than four persons are actively subjected to a temporary suspension under the Disease Prevention and Control Regulation of the government. Therefore, companies must be cautious of these regulations and ensure that every possible alternative is technically legal.
The following guides will walk you through a quick review of the corporate meetings policy or how Hong Kong companies can hold AGMs during the Covid-19 pandemic.
Annual General Meetings
For each fiscal year, any business organization in Hong Kong must hold an Annual General Meeting (AGM). The AGM must be organized for corporations every nine months at the end of all its accounting reference time tables. A company could be exempt from having an AGM if:
- Everything that’s planned to be done on the scheduled meeting is settled and carried by way of a resolution. A copy of the presented files is then sent to each stockholder sometime before the resolution’s deadline.
- The company alone has one stockholder; or
- The business has discharged holding the AGM by agreement of all stockholders;
- Company hasn’t withdrawn the resolution, and thus no shareholder has requested that the AGM be held.
However, suppose a company can be excused from organizing an AGM by complying with one of the conditions stated above. In that case, it’ll still be impossible for the company to furnish a written resolution with all stockholders agreeing not to hold an AGM.
How Can Companies Conduct AGMs during the Covid-19 Pandemic?
Given the argument above, it’s safe to conclude that most AGMs will continue, even with a limited majority of shareholders present. It would be valid since the rightful quorum of attendance requirement for the company meeting is more secondary.
Despite the challenges companies may face amidst this pandemic, an AGM can push through, Below are some ways on how companies can conduct their AGMs for this fiscal year.
- An AGM can still be held in two or more sites by incorporating technology that allows participants at multiple places to hear, talk, and vote at the discussion. Companies conducting their AGM in this manner must ensure that they’re in a position to use it legally and operationally.
- Participants have the right to participate in important business discussions, such as elections. However, the participant should advise the company ahead of time or appoint a proxy into how everyone wishes to vote.
- Companies should allow investors to submit their concerns in a written recommendation and submit it to the AGM management.
- A meeting can’t be canceled or postponed if it’s already been scheduled.
- While it’s legally appropriate, it isn’t easy to produce a written file to resolve the AGM. The majority of the company members who vote at the session must show their consent to the proposed written resolutions.
The circumstances caused by COVID-19 pose challenges on Hong Kong companies to conduct their AGM. More business owners are starting to think about introducing changes to their constitutional records to counterbalance the need to meet during AGMs physically.
To help you in your struggles with how you can conduct your AGM, contact 3E Accounting Hong Kong. Ask any questions associated with your company’s 2020 AGM. More importantly, if you need to incorporate your company in Hong Kong, 3E Accounting Hong Kong is your one-stop-shop.