Government Advice for Holding Company Annual General Meetings During the COVID-19 Pandemic

Government Advice for Holding Company AGM During the COVID-19 Pandemic

The COVID-19 pandemic has made it necessary for companies to undertake measures for health and safety concerns. The Hong Kong Government has introduced measures to implement social distancing such as the Prevention and Control of Disease (Prohibition on Group Gathering) Regulation which, among other things, prohibited a group gathering of more than 4 persons in a public place.

Pursuant to the Amendment Regulation, with effect from 8 May 2020, group gatherings of more than 8 (instead of 4) persons are prohibited in any public place until 21 May 2020. This may be further extended by notice published in the Gazette.

In light of such stipulations, the Government has also provided advice relating to the holding of annual general meetings by companies with effect from 8 May 2020.

 

Government Advice for Holding Company General Meetings

1. General Meetings should not be held in a ‘public place’

   • Meaning of ‘public place’: Under section 2 of the Regulation, a public place is “a place to which the public or a section of the public may or are permitted to have access from time to time, whether by payment or otherwise”.

   As such, general meetings cannot be held by companies in a public place as defined in the Regulation. However, companies are still able to hold general meetings at non-public place (ie. a place to which the public do not have access) without being subject to the typical restrictions under the Regulation.

2. Companies should consider the possibility of deferring or adjourning their general meetings

   Taking into the account the utmost importance of public health and safety, cooperation by all individuals and companies are needed in combating the transmission and spread of COVID-19. Therefore, companies should strongly consider deferring or adjourning general meetings until after the expiration of the Specified Period.

   Companies should consider the following when making the decision:

   • Whether holding the annual general meeting is subject to any statutory requirement,
   • And if so, whether the requirement is capable of extension, waiver or otherwise,
   • Whether the urgency and importance of any business to be dealt with necessitates the holding of the meeting

3. Recommended measures for holding a general meeting

   In order to minimize the risk of transmission and infection of COVID-19, companies are urged to consider and adopt some measures, where appropriate, in the conduct of a general meeting.

   Such measures include:

   • Hybrid Meetings: Under section 584, a company is expressly permitted to hold a general meeting at two or more places through technology that allows members who at different areas to listen, speak, and vote subject to the company’s articles of association. Companies are thus highly encouraged to make use of digital tools and virtual conferencing software to hold hybrid general meetings. This reduces the need for physical attendance and eliminates the risk of transmission and infection of the virus.In compliance with section 576, whenever a general meeting is to be held in two or more places, the notice of meeting shall indicate the principal place of the meeting and other places of the meeting.
   • Pre-registration and Proxy Voting: To manage the number of members that may attend the meeting, companies should consider requesting members to pre-register if they (or their proxies) wish to attend the meeting in person. Members should also be encouraged to vote by proxy or by electronic modes of voting, if applicable, and to submit questions in writing before the meeting. Section 585(3) specifies that where, subject to the provisions of the company’s papers, a company has more than 1 member, 2 members present in person or by proxy is a quorum of the company’s general meeting. Parts 596 to 608 (Subdivision 9 of Division 1 of Part 12) stipulate the right to nominate a proxy and the procedures for nominating proxies.

 

Special Exemptions Under the Regulation

Effective from 8th May 2020, Item 11 of Schedule 1 of the Regulation (“Item 11”) provides an exemption for a “group gathering during any of the following meetings at which no food or drink is served and, in the case of a group gathering of more than 50 persons, measures are in place for separating them in different rooms or partitioned areas, each accommodating not more than 50 persons…”

The exemption extends to:

• A meeting of a body that must be held within a specified period in order to comply with any Ordinance or other regulatory instrument that governs the operation of the body or its business;
• A shareholders’ meeting of a company listed on a recognized stock market (as defined by section 1 of Part 1 of Schedule 1 to the Securities and Futures Ordinance (Cap. 571)) that is held in accordance with any Ordinance or other regulatory instrument that governs the operation of the company or its business

 

The special exemption also applies to Hong Kong-listed companies as all shareholders’ meetings, including (i) annual general meetings (“AGMs”) as required under the Companies Ordinance (Cap. 622) (“CO”) and/or the Main Board Listing Rules or the GEM Listing Rules; and (ii) extraordinary general meetings and special general meetings of Hong Kong-listed companies, are generally exempted from the prohibition.

As specified in Item 11, companies MUST adhere to the following rules:

• No food or drink can be served during the meeting
• Group gatherings of more than 50 persons should be separated in different rooms or partitioned areas, each accommodating not more than 50 persons

 

Other Precautionary Measures

Other recommended measures include:

• Screening of attendees’ body temperatures whereby those with high body temperature will not be allowed to enter the venue
• All attendees will be required to wear a face mask
• Providing hand sanitizers and sanitizing mats at the entrance of the meeting venue; and
• Appropriately distancing seats to adhere to social distancing rules