Annual General Meeting in Hong Kong

If you're running a business, understanding the annual general meeting in Hong Kong is important to stay compliant and maintain good corporate governance. In this article, we’ll break down what an AGM is, why it matters, how to conduct one, and the legal requirements you need to follow in Hong Kong.

What is an Annual General Meeting (AGM)?

An Annual General Meeting (AGM) is a mandatory yearly meeting where a company’s shareholders review financial statements, approve key decisions, and discuss company affairs. It ensures transparency and accountability in corporate governance.

In Hong Kong, AGMs are governed by the Companies Ordinance (Cap. 622). The law requires companies to hold an AGM for each financial year unless they qualify for an exemption. 

Key Aspects of AGMs

• Legal Requirement: Companies must hold an AGM annually.
• Shareholder Participation: Allows shareholders to discuss financial reports, vote on resolutions, and elect directors.
• Meeting Materials: Distributed in advance, including the agenda, financial statements, and proposed resolutions.
• Proxy Voting: Shareholders who cannot attend may appoint a representative to vote on their behalf.
• Company Oversight: Shareholders can raise concerns and stay informed about operations.

AGMs play a crucial role in corporate governance, ensuring transparency and accountability while giving shareholders a say in the company's future.

Legal Requirements and Compliance for AGMs in Hong Kong

Companies in Hong Kong must follow specific legal requirements when organizing an AGM. These regulations cover timing, notice periods, meeting formats, and compliance obligations to ensure proper governance.

AGM Timing and Deadlines

Under Section 610 of the Companies Ordinance, companies must hold an AGM within:

• Private companies (not subsidiaries of a public company) and companies limited by guarantee must hold an AGM within 9 months after the end of the accounting reference period.
• All other companies must hold an AGM within 6 months after the end of the accounting reference period.

For newly incorporated companies with a first accounting reference period longer than 12 months, special deadlines apply based on their incorporation anniversary.

Notice Period for an AGM

• The minimum notice period is 21 days (Section 571(1)).
• If the company’s articles of association require a longer notice period, that period must be followed (Section 571(2)).
• A shorter notice period is allowed only if all shareholders entitled to vote agree (Section 571(3)(a)).

AGM Format: Physical, Virtual, or Hybrid

Under Section 584, AGMs can be conducted:

• At a single physical location.
• At multiple locations using technology, allowing shareholders to listen, speak, and vote.
• Fully virtual or hybrid, as permitted by the Companies (Amendment) Ordinance 2023, effective April 28, 2023.

A company’s articles of association must allow for virtual or hybrid AGMs if they wish to conduct them in that format.

Compliance Obligations

• Financial Reports: Companies must send financial statements to shareholders before the meeting (Section 430(3)).
• Auditor Appointment: If no AGM is held, the auditor is automatically reappointed for the next financial year (Section 403(1)).

These legal requirements, as outlined by the Companies Registry of Hong Kong, ensure that companies remain compliant and maintain good corporate governance.

Key Roles and Responsibilities During an AGM

AGM involves various company officers and shareholders, each with specific roles to ensure compliance with the Companies Ordinance (Cap. 622). 

1. Board of Directors

The board of directors is responsible for overseeing the AGM process. Their key duties include:

• Scheduling the meeting in accordance with legal deadlines under Section 610.
• Preparing the agenda, including financial reporting and director elections.
• Presenting audited financial statements to shareholders.
• Addressing shareholder questions on governance and company strategy.

2. Company Secretary

The company secretary plays a critical role in ensuring the AGM follows legal procedures. Responsibilities include:

• Sending AGM notices to shareholders at least 21 days in advance (Section 571).
• Ensuring financial statements, resolutions, and minutes from previous meetings are available.
• Documenting key discussions and resolutions for legal compliance.

3. Shareholders

Shareholders have the right to:

• Attend and vote on key decisions, including approving financial statements and electing directors.
• Request additional resolutions if they hold at least 5% of total voting rights (Section 582).
• Appoint a proxy to vote on their behalf if they cannot attend (Section 596).

4. Chairperson

The chairperson, usually the board’s chairman or a designated director, leads the AGM. Responsibilities include:

• Conducting the meeting by company rules and regulations.
• Ensuring fair voting procedures.
• Declaring voting results and overseeing the proper recording of resolutions.

5. Auditor

The company’s auditor presents the audited financial statements and answers shareholder questions regarding the company’s financial health.

How to Call and Hold an Annual General Meeting (AGM)

Step 1: Issue a Notice of the Meeting

• Send a formal notice at least 21 days before the scheduled AGM.
• Ensure all shareholders receive the notice, including the meeting agenda.

Step 2: Distribute Relevant Documents

• The company secretary must provide directors with all necessary documents related to the agenda at least 14 days before the AGM.

Step 3: Prepare the Shareholder List

• A list of members eligible to attend and vote must be available for inspection during the AGM.

Step 4: Present the Annual Report

• The company must present an annual report, including financial statements, to shareholders.

Step 5: Ensure a Quorum

• At least one director must be present.
• Shareholders representing at least 10% of total voting power must attend to form a quorum.

Step 6: Conduct Voting and Pass Resolutions

• A majority vote is required for resolutions to pass.
• If votes are tied, the chairman has the casting vote.

Step 7: Record Meeting Minutes

• An appointed officer or member must record and sign the official minutes as soon as possible after the meeting.

Step 8: Handle Adjournments (If Necessary)

• If the meeting is adjourned, a new notice must be sent within 30 days to all entitled members.

Step 9: Notify Members and File with the Companies Registry

• The company secretary must notify members of any adjournments or resolutions passed.
• A copy of all notices must be filed with the Companies Registry.

Exemptions and Special Provisions for Certain Hong Kong Companies

Not all companies in Hong Kong are required to hold an AGM. The Companies Ordinance (Cap. 622) outlines specific circumstances where companies can be exempted from this requirement. These exemptions provide flexibility while ensuring compliance with legal obligations.

1. Exemption Through Written Resolution (Section 612(1))

A company does not need to hold an AGM if:

• All matters required to be discussed at an AGM (such as approving financial statements and electing directors) are agreed upon through a written resolution.
• Copies of all necessary documents are sent to shareholders before the resolution is passed.

2. Dormant Companies (Section 611)

Companies that are dormant (i.e., they have no significant accounting transactions) are not required to hold AGMs.

• Dormant status must be registered with the Companies Registry.

Key Considerations for Exempt Companies

Even if a company is exempt from holding an AGM, it must still:

• Send financial reports to shareholders (Section 430(3)).
• Ensure auditor reappointment unless shareholders decide otherwise (Section 403(1)).
• Follow its articles of association for decisions on dividends and director reappointments.

Conclusion

The annual general meeting of a company is an important event in its calendar, as it provides directors and shareholders with the opportunity to discuss matters relating to the business's development and operations.

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