Hong Kong Companies Ordinance to allow fully virtual or hybrid general meetings
On 18 January 2023, the Legislative Council passed the Companies (Amendment) Bill 2022, which will modernise the Companies Ordinance (Cap. 622) (“CO”) to provide greater flexibility for Hong Kong companies to hold a fully virtual or hybrid general meeting, regardless of the physical locations of the shareholders attending the meeting. It will clarify that virtual or hybrid general meetings are generally allowed under the CO, thereby removing uncertainty and potentially saving costs for leasing meeting venue, holding physical meeting or amending articles that may otherwise be required.
The manner of holding a general meeting is governed by the provisions in the CO, subject to the articles of association of a company including the model articles under the Companies (Model Articles) Notice (Cap. 622H) or Table A under the predecessor Companies Ordinance (Cap. 32) so far as they apply to the company.
At present, section 584 of the CO provides that, subject to its articles of association, a company may hold a general meeting at 2 or more places using any technology that enables the shareholders who are not together at the same place to listen, speak and vote at the meeting. Notably, it refers to holding a general meeting at two or more places, thereby suggesting that a general meeting must be held at two or more physical locations with shareholders being physically present at those locations. The CO currently does not contain any provision which allows a company to hold a general meeting by way of a fully virtual meeting or in hybrid mode of virtual and physical meeting. This has posed uncertainties to companies which required flexibility in the manner of conducting general meetings in light of COVID-19-related social distancing measures imposed in the past few years.
The amended CO will provide a clear legal basis for companies whose articles of association follow the existing CO and refer to a place or places for conducting a general meeting to hold fully virtual or hybrid general meetings. Specifically, unless a company’s articles expressly preclude the holding of a general meeting by using virtual meeting technology or require a general meeting to be held only at a physical venue, a notice of the general meeting may specify the virtual meeting technology to be used for holding the meeting without also specifying the physical venue of the meeting. A new term of “virtual meeting technology” will be added to the CO which will be defined as “a technology that allows a person to listen, speak and vote at a meeting without being physically present at the meeting”.
The recent pandemic has accelerated the use of apps to facilitate virtual meetings so much so that virtual meetings are now ingrained in modern business and commerce. This is a timely amendment of the CO which would enable companies to adopt flexible modes of holding general meetings without having to amend their articles or prepare a physical venue. It will also allow Hong Kong to align with other common law jurisdictions to allow virtual or hybrid meetings.
The amended CO will take effect on 28 April 2023. The Companies Registry is expected to issue guidelines and organise talks for companies to ensure smooth implementation of the new arrangements. Companies and shareholders may wish to take this opportunity to consider whether they would like to make use of these new arrangements to hold virtual or hybrid general meetings or to preclude the holding of virtual or hybrid general meetings going forward.
Pan Tsang and Min Sung
For specific advice on the Companies Ordinance and related matters in Hong Kong, please contact:-
Pan Tsang | email@example.com | +852 2861 8487
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.