As the name suggests, the Annual general meeting is the meeting of directors and shareholders on an annual basis to talk about essential matters and reports of the company. It is necessary to hold the general meeting annually for all the companies. Also, it is thus called Annual General Meeting or AGM according to the companies Ordinance. At these meetings, the companies talk about their general matters like appointing the company secretary, their certified public accounts, and many other issues.
Whenever a company is newly incorporated, it should hold its first meeting in at least 18 months, and this meeting is called minutes of annual general meetings. And in such arrangements, the companies shall discuss the company’s state, its shareholders, share capital, and company secretary. The primary purpose of AGM is to examine the major matters of the company. Also, it is unnecessary to have the AGM in Hong Kong only; it could occur anywhere.
Annual General Meeting in Hong Kong
As mentioned above, a general meeting in Hong Kong takes place once every year. In this meeting, general business issues would be discussed, like the appointment of the company secretary, certified public accountant, and other essential matters to be addressed. Before we move further, let us know in-depth all about the annual general meetings.
What is the annual general meeting in Hong Kong?
Similar to many other jurisdictions, the AGM in Hong Kong also happens on an annual basis. As per the new Companies Ordinance (CO), the companies must hold their AGM not according to their calendar year but according to their financial year. Also, this accounting reference period determines the time interval within which the company should prepare its financial statements. You must follow the basic agenda structure in the meeting. Besides the mandatory presentation of financial statements, you don’t have to add the other items in case you feel they are unnecessary for your company.
- The company director must deliver the welcome address.
- Recap of the previous AGM meeting.
- Discuss any follow-up actions based on the previous AGM discussion.
- Present the financial statements for shareholders to approve. Also, present issues to be discussed and approved.
- Other general updates in case they want to brief shareholders on the activities of the company.
- Any other matters that can raise shareholders’ concerns.
- Closing remarks if any.
Depending on how familiar you are with your shareholders, one can decide the level of formality. If you are already familiar with the shareholders, the meeting can be more casual. But, do not forget to discuss and resolve all the above points.
Is it necessary for a Hong Kong company to hold an AGM every year?
A Hong Kong company must hold an AGM regarding the company’s financial year as per the new CO, rather than in each calendar year. There are however few circumstances when a company does not require to hold an AGM meeting.
When Should a Company Run its AGM?
The company should run annual general meetings according to the following time intervals:
- Nine months after the ending of its accounting reference period: this term applies to those private companies or companies limited by guarantee that are not a part of any public company.
- At least six months after ending a company’s accounting reference period, this condition applies to all the other companies.
- Now, suppose the accounting reference period of a company is its first reference period, and it somehow has exceeded the 12 month period.
In that case, the company should hold its AGM in the following time intervals:
- The companies that are limited by guarantee or any private company that is not part of any public company should hold its AGM 9 months after the company’s first anniversary or three months after the ending of the accounting reference period, whichever comes later.
- For the rest of the companies, the AGM should happen after five months of its first anniversary or after three months of ending its accounting reference period. Whichever comes later.
- According to section 584, the companies can also hold virtual meetings at two and more than two places if it is a new CO. Such technology allows those members to listen, speak and vote in the meeting who are not physically present.
Notice Period for AGM
According to general rules, the company has to give a 21-day notice to its members before holding an AGM. In other cases, the notice period provided by the limited companies is 14 days, and the notice period given by the unlimited companies is at least seven days. Though, the notice period could be longer according to the company’s articles of association.
Organizing Annual General Meeting in Hong Kong
The following are steps according to which a company should organize an annual general meeting or AGM.
Hold a Board Meeting and Plan the AGM
Once the company has received the audited financial statements from its auditors, its directors should organize an AGM. First, the company has to agree to hold an AGM, and then it has to set a date to hold the AGM. The company must hold an AGM within nine months before its financial year ends. The notice period for holding the AGM should be issued at least 21 days earlier. And to be on time, the company must plan the AGM at least one month in advance to give three weeks’ notice to its members to prepare. When having a board meeting, the company shall decide the agenda of its AGM and it should also send a formal notice to its shareholders regarding the AGM. You can also use the platform of AGM to propose recommendations on many matters. The matters such as the appointment of new auditors or directors, distribution of dividends, etc.
Send the notice
The purpose of sending a notice is to inform the shareholders about the details, like date, time, location, and AGM agenda. It also seeks their RSVP. A note can even be a simple email. According to the company’s ordinance, the shareholders have the right to send their proxy or representatives to the meeting and these representatives can vote in place of their shareholders.
Prepare meeting agenda
In simple terms, an agenda is a list or outline of the topics and information that need to be discussed in the meeting. Keep the agenda of the meeting prepared in advance. It will help if you send out the agenda along with the notice of the meeting to your shareholders or the attendees. Keep the topics of discussion handy so that you won’t forget them. Lastly, you don’t have to notify the chair about the details of the agenda, listing them will be enough as you are going to discuss them at the meeting.
Discuss the agenda during the meeting
The following is the basic agenda structure that can be used during the AGM. The critical agenda of the AGM is discussing the financial statement. The rest of the topics can be included or excluded according to the requirements.
- Start the meeting with a welcome address by any designated company director.
- Give a recap of the previous AGM meetings.
- Then give some updates on the follow-up actions on the topics discussed in the previous AGM.
- After this, give the Financial statement presentation. The purpose of such meetings is to seek the approval of the shareholders.
- Then discuss the other matters along with the schedule.
- Now you can give the general updates and brief about the company’s activities to the shareholders.
- Discuss other matters which you think the shareholders might be concerned about.
- Lastly, give the closing remarks.
Now the tone of the meeting could depend on how often you have the meeting with the shareholders. If you are discussing any new topic, then keep the forum formal. But if such discussions take place very frequently, and the shareholders already know about the stats of the company, then you can keep the tone friendly and casual.
Prepare minutes of the meeting
After the meeting is over, document the key decisions made during the AGM and capture key discussions and key points. The company chairman should sign the completed minutes. Lastly, circulate the minutes to all shareholders for their records.
By the Proxy Appointment, we mean those attending and voting in the AGM on behalf of some other member absent from the meeting. All the members of a company are given the right to appoint their proxy.
According to the new CO, the following are the new set of rules to appoint a proxy:
- Section 596(1) says that all companies have the right to appoint a proxy.
- Section 596(2) says that the companies which are limited by guarantee can appoint a proxy, by its articles, but for its members only.
- According to section 596(3), multiple proxies can be appointed by companies with shared capital.
- As per section 598, if a poll is demanded, the company has to specify a notice period for the appointment of a proxy.
- Section 599 says that you can use electronic means to send to the company for the appointment and termination of a proxy.
- Then section 601 says that a company should issue such an instrument of proxy to its members, allowing them to vote in favor or against each resolution.
- Lastly, according to the 608, the companies can grant more extensive rights, according to its articles, to their members or proxies.
Exemptions from Holding AGM
According to the new CO, the following are the circumstances under which a company can exempt themselves from holding an AGM:
- As per section 612(1), a company is allowed to be exempt from holding an AGM if all the tasks it was supposed to do at the AGM are done. In this case, the company has already laid the written resolutions and copies of documents among its members on or before the circulation date of the written resolution.
- According to section 612(2)(a) of the CO, single-member companies are not required to hold the AGM.
- As per section 613, if all the company members pass a resolution at its general meeting to exempt from holding the AGM, it is not required to conduct an AGM.
- Lastly, section 611 says that the dormant companies are not required to hold AGMs. Thus they are exempted from holding any.
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