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Meetings, Resolutions and Company Records

 
(I)

Meetings and Resolutions

 
Q1.

Are there any initiatives introduced under the new Companies Ordinance (Cap. 622) (“the new CO”) to facilitate the holding of general meetings?

 
Q2.

Is it necessary for a company to hold an annual general meeting (“AGM”) every year under the new CO?

 
Q3.

For a single member company, does the company need to pass any resolution to dispense with an AGM?

 
Q4.

If a company is not required to hold an AGM under section 612(2)(a) of the new CO or has dispensed with holding its AGM under sections 612(2)(b) and 613 of the new CO, how should the company lay the company’s accounts, approve the declaration of final dividend and resolve matters such as reappointment of directors or auditors?

 
Q5.

How can a company dispense with the holding of AGMs under the new CO? Can a company dispense with holding an AGM under sections 612(2)(b) and 613 in relation to a financial year beginning before the commencement date of the new CO?

 
Q6.

For a company registered under a former Companies Ordinance, is it necessary for the company to amend its articles of association (“articles”) before it may take advantage of sections 612(2) and 613 and not hold or dispense with holding its AGM?

 
Q7.

When must a company hold its AGMs under the new CO?

 
Q8.

What is the notice period for holding a general meeting under the new CO?

 
Q9.

Can a general meeting of a company be called by notice shorter than 21 days? If yes, what are the requirements under the new CO?

 
Q10.

If a company’s articles require a longer period of notice for calling a general meeting than that specified in section 571(1), can a general meeting of the company be called by notice shorter than that specified in the articles? If yes, what are the requirements under the new CO?

 
Q11.

Are there any new rules introduced under the new CO for proposing and passing a written resolution?

 
Q12.

If a company’s articles set out alternative procedures for passing a resolution without a meeting, is the company required to comply with the procedures in Subdivision 2 of Division 1 of Part 12 (“the statutory procedures”) such as notifying the members and the auditor of the company that a written resolution has been passed?

 
Q13.

Who may propose a written resolution under the new CO?

 
Q14.

If a resolution is proposed as a written resolution by a person other than the directors or a member of a company, is the company required to circulate the resolution pursuant to section 553? What if the resolution is proposed by a member of a company with less than 5% of the total voting rights?

 
Q15.

Are there any major changes in the rights of members in relation to members’ resolutions and statements?

 
Q16.

What is the threshold for demanding a poll under the new CO?

 
Q17.

What are the new rules for appointing a proxy under the new CO?

 
(II)

Company Records

 
Q18.

What is the minimum period for keeping records of former members, records of resolutions and meetings of members and written records of decisions of a single member company by a company under the new CO?

 
Q19.

Are there any major changes in respect of the keeping of the register of directors and the register of company secretaries under the new CO?

 
Q20.

Are there any major changes in respect of the keeping of an overseas branch register under the new CO?

 
(III)

Company Records (Inspection and Provision of Copies) Regulation (Cap. 622I) (“CR(IPC) Reg”)

 
Q21.

What is the CR(IPC) Reg for?

 
Q22.

Does the CR(IPC) Reg apply to all records kept by a company?

 
Q23.

We know that under the old Ordinance, certain company records (e.g. register of members) must be kept at the registered office of the company, or at a place where the records are made up. Is there any change to this requirement?

 
Q24.

Are there any major changes to the inspection arrangement of company records?

 
Q25.

Do I need to pay any fee to inspect the company records?

 
Q26.

Can the company charge a higher or lower fee for inspection?

 
Q27.

Are there any major changes to the requirement on the provision of copies of company records?

 
Q28.

Can the company charge a higher or lower fee for providing copies?

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(I)

Meetings and Resolutions

 
Q1.

Are there any initiatives introduced under the new Companies Ordinance (Cap. 622) (“the new CO”) to facilitate the holding of general meetings?

 
Answer:

Yes. Under section 584, a company may hold a general meeting at two or more places using any technology that enables the members who are not together at the same place to listen, speak and vote at the meeting, subject to any provision of its articles.

 
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Q2.

Is it necessary for a company to hold an annual general meeting (“AGM”) every year under the new CO?

 
Answer:

Under the new CO, a company must hold an AGM in respect of each financial year of the company, instead of in each calendar year. Please see Q7 below. A company is not required to hold an AGM in the following circumstances –

Under section 612(1), a company is not required to hold an AGM if everything that is required to be done at the meeting is done by a written resolution and copies of the documents required to be laid or produced at the meeting are provided to each member of the company on or before the circulation date of the written resolution.

Section 612(2)(a) provides that a single member company is not required to hold an AGM.

Section 613 allows a company to dispense with the holding of AGMs by a written resolution or a resolution at a general meeting passed by all members.

Section 611 exempts a dormant company from the requirement to hold AGMs.

 
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Q3.

For a single member company, does the company need to pass any resolution to dispense with an AGM?

 
Answer:

A single member company is not required to hold an AGM under section 612(2)(a) of the new CO. There is no need to pass any resolution to dispense with the holding of an AGM.

 
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Q4.

If a company is not required to hold an AGM under section 612(2)(a) of the new CO or has dispensed with holding its AGM under sections 612(2)(b) and 613 of the new CO, how should the company lay the company’s accounts, approve the declaration of final dividend and resolve matters such as reappointment of directors or auditors?

 
Answer:

If a company is not required to hold an AGM in respect of a financial year, the person who is the auditor of the company as at the end of the appointment period is deemed to be reappointed for the next financial year (section 403(1)) and the company must send a copy of the reporting documents for the financial year to every member of the company (section 430(3)).

 

There is no provision in the new CO that deals with the distribution of final dividend or re-election of directors when a company is not required to hold an AGM under section 612(2)(a) or has dispensed with holding its AGM under sections 612(2)(b) and 613. A company may make reference to the relevant provisions, if any, in its articles of association for such purposes. For companies which have adopted the model articles for private companies, they may refer to Schedule 2 to the Companies (Model Articles) Notice (Cap. 622H). If necessary, the directors may call or the members of the company may request the directors to call a general meeting to deal with such matters. A written resolution may also be passed for such purposes.

 
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Q5.

How can a company dispense with the holding of AGMs under the new CO? Can a company dispense with holding an AGM under sections 612(2)(b) and 613 in relation to a financial year beginning before the commencement date of the new CO?

 
Answer:

Please see Q2 above. A company is required to deliver a copy of the resolution passed under section 613 to the Registrar of Companies for registration within 15 days after it has been passed (sections 622(1)(g) and (2)).

 

A company can only rely on sections 612(2)(b) and 613 to dispense with holding an AGM in relation to a company’s financial year beginning on or after the commencement of the new CO on 3 March 2014. A single member company is also not required to hold an AGM under section 612(2)(a) of the new CO only in relation to a company’s financial year beginning on or after 3 March 2014. Please refer to sections 78(1) and 107(2) of Schedule 11.

 
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Q6.

For a company registered under a former Companies Ordinance, is it necessary for the company to amend its articles of association (“articles”) before it may take advantage of sections 612(2) and 613 and not hold or dispense with holding its AGM?

 
Answer:

The relevant provisions on dispensation with AGMs are permissive and are not expressed to override the provisions in a company's articles. Companies may wish to provide for their own requirements in their articles as they consider appropriate.

 

If the company wishes to take advantage of sections 612(2) and 613 but the company's articles provide that an AGM must be held or prohibit the dispensation with AGMs, the company would have to amend its articles so that it will not be in breach of its articles if no AGM is held. As the provisions in the articles differ, individual companies should seek professional advice to consider whether amendment is necessary.

 
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Q7.

When must a company hold its AGMs under the new CO?

 
Answer:

A company must, in respect of each financial year, hold its AGM within the following period –

in the case of a company limited by guarantee or a private company that is not a subsidiary of a public company, 9 months after the end of its accounting reference period; and

in the case of any other company, 6 months after the end of its accounting reference period.

(Sections 610(1) and (4))

 

The accounting reference period is the period by reference to which the financial year is to be determined

 

If the accounting reference period is the first accounting reference period of the company and is longer than 12 months, the company must hold its AGM within the following period –

in the case of a company limited by guarantee or a private company that is not a subsidiary of a public company –

(i)

9 months after the first anniversary of the company’s incorporation; or

(ii)

3 months after the end of that accounting reference period, whichever is the later; and

in the case of any other company -

(i)

6 months after the first anniversary of the company’s incorporation; or

(ii)

3 months after the end of that accounting reference period, whichever is the later.

(Sections 610(2) and (4))

 
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Q8.

What is the notice period for holding a general meeting under the new CO?

 
Answer:

In the case of an AGM, the notice period is at least 21 days. In any other case the notice period is at least 14 days for a limited company, and at least 7 days for an unlimited company (section 571(1)).

 

If the company’s articles require a longer period of notice the meeting must be called by notice of that longer period (section 571(2))

 
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Q9.

Can a general meeting of a company be called by notice shorter than 21 days? If yes, what are the requirements under the new CO?

 
Answer:

Yes. In the case of an AGM, the meeting can be called by notice shorter than 21 days (as specified in section 571(1)(a)) if it is so agreed by all the members entitled to attend and vote at the meeting (section 571(3)(a)). In the case of any other meeting, the meeting can be called by notice shorter than 14 days (for a limited company) and 7 days (for an unlimited company), as appropriate (see section 571(1)(b)), if it is so agreed by a majority in number of the members having the right to attend and vote at the meeting, being a majority together representing at least 95% of the total voting rights of all members (section 571(3)(b)).

 
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Q10.

If a company’s articles require a longer period of notice for calling a general meeting than that specified in section 571(1), can a general meeting of the company be called by notice shorter than that specified in the articles? If yes, what are the requirements under the new CO?

 
Answer:

Yes. A general meeting of the company is regarded as having been duly called if: in the case of an AGM, a period of notice shorter than 21 days is so agreed by all the members entitled to attend and vote at the meeting (section 571(3)(a)); and, in the case of any other meeting, the shorter period of notice is so agreed by a majority in number of the members having the right to attend and vote at the meeting, being a majority together representing at least 95% of the total voting rights of all members (section 571(3)(b)).

 
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Q11.

Are there any new rules introduced under the new CO for proposing and passing a written resolution?

 
Answer:

Subdivision 2 of Division 1 of Part 12 provides the procedures for proposing, passing and recording written resolutions. Basically it provides for the following -

A company must circulate a proposed written resolution to all members who are entitled to vote if it has received requests from members representing not less than 5% of the total voting rights or a lower percentage specified for the purpose in the company’s articles (section 552).

A member who proposes a written resolution may request the company to circulate with the resolution a statement of not more than 1000 words on the subject matter of the resolution (section 551).

A company is not bound to circulate the statement if the Court is satisfied that the right is being abused or being used to secure needless publicity for defamatory matter (section 554).

The circulation may be effected by sending the copies in hard copy form or electronic form or by making them available on a website (section 553). Members may signify their agreement to a proposed written resolution and send it back to the company either in hard copy form or electronic form (section 556).

The period for agreeing to the proposed written resolution is 28 days or such period as specified in the company’s articles (section 558).

If a resolution is passed as a written resolution, the company must send a notice of that fact to every member and the auditor of the company within 15 days (section 559).

A company’s articles may also set out alternative procedures for passing a resolution without a meeting, provided that the resolution has been agreed to by all the members entitled to vote (section 561).

 
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Q12.

If a company’s articles set out alternative procedures for passing a resolution without a meeting, is the company required to comply with the procedures in Subdivision 2 of Division 1 of Part 12 (“the statutory procedures”) such as notifying the members and the auditor of the company that a written resolution has been passed?

 
Answer:

If the company’s articles provide procedures on passing a resolution without a meeting and the provisions in the articles comply with sections 561(2) and (3), the company may pass a resolution pursuant to such provisions in the articles. The statutory procedures do not affect such provisions in the articles.

 

Please note, however, that section 561(1) provides that a provision of a company's articles is void in so far as it would have the effect that a resolution could not be proposed and passed as a written resolution. If a written resolution is duly proposed by the directors or a member of the company pursuant to section 549, the company is required to comply with all the statutory procedures.

 
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Q13.

Who may propose a written resolution under the new CO?

 
Answer:

The directors or a member of a company may propose a resolution as a written resolution (section 549).

 
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Q14.

If a resolution is proposed as a written resolution by a person other than the directors or a member of a company, is the company required to circulate the resolution pursuant to section 553? What if the resolution is proposed by a member of a company with less than 5% of the total voting rights?

 
Answer:

The company is not required to circulate a resolution as a written resolution under section 550 or 552 if the resolution is not proposed by the directors or a member of the company pursuant to section 549.

 

If the company’s articles do not specify a percentage lower than 5% of the total voting rights for circulation of a resolution proposed as a written resolution, and the company has not received requests for circulation of the resolution from members of the company representing not less than 5% of the total voting rights of all the members entitled to vote on the resolution, the company is not required to circulate the resolution under section 552.

 

In the above cases, the requirement to circulate the resolution proposed as a written resolution under section 553 is not applicable, since section 553 applies when a company is required under section 550 or 552 to circulate a resolution proposed as a written resolution.

 
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Q15.

Are there any major changes in the rights of members in relation to members’ resolutions and statements?

 
Answer:

Under section 115A of the old Companies Ordinance (Cap. 32) (“the old Ordinance”), members of a company meeting a certain threshold may request the company to circulate a proposed resolution for the next AGM or a statement of not more than 1000 words relating to any proposed resolution or business to be dealt with at any general meeting. The company is not bound to circulate a statement where the Court is satisfied that the right is being abused to secure needless publicity for defamatory matter. Members making the requisition need to bear the expenses of circulation unless the company resolves otherwise.

 

Under the new CO, sections 582, 615 and 616 provide that the expenses of circulating members’ proposed resolution at an AGM and members’ statements relating to a proposed resolution or business to be dealt with at the AGM will be borne by the company, provided that the required threshold for requests to circulate the proposed resolution is received by the company not later than 6 weeks before the AGM or, if later, before the time at which notice of the meeting is given; and in the case of a statement, the required threshold for requests to circulate the statement is received by the company in time for sending with the notice of the meeting. The criteria for not requiring circulation of the members’ statement is also changed to where, on an application by the company or a person who claims to be aggrieved, the Court is satisfied that there is an abuse of the right to require the circulation or where such right is being used to secure needless publicity for defamatory matter (section 583).

 
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Q16.

What is the threshold for demanding a poll under the new CO?

 
Answer:

The threshold for demanding a poll under the new CO is 5 members having the right to vote at the meeting or a member or members representing 5% of the total voting rights of all the members having the right to vote at the meeting (section 591).

 
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Q17.

What are the new rules for appointing a proxy under the new CO?

 
Answer:

The new rules for appointing a proxy under the new CO are as follows –

the right to appoint another person as a proxy applies to all companies (section 596 (1));

a company limited by guarantee may by its articles confine proxies to members of the company only (section 596(2));

multiple proxies may be appointed in the case of a company having a share capital (section 596(3));

a notice period is specified for an appointment of proxy where a poll is demanded (section 598);

appointment and termination of a proxy may be sent to the company by electronic means (section 599);

an instrument of proxy issued by a company must be such as to enable the member to instruct the proxy to vote in favour of or against (or, in default of instructions, to exercise the proxy’s discretion in respect of) each resolution (section 601);

a company’s articles may give more extensive rights to its members or proxies than are provided in the new CO (section 608).

 
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(II)

Company Records

 
Q18.

What is the minimum period for keeping records of former members, records of resolutions and meetings of members and written records of decisions of a single member company by a company under the new CO?

 
Answer:

In respect of records of former members, the minimum period is 10 years from the date on which the person ceased to be a member of the company (section 627(5)). In respect of records of resolutions and meetings of members and written records of decisions of a single member company, the period is at least 10 years from the date of the resolution, meeting or decision (section 618(2)).

 
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Q19.

Are there any major changes in respect of the keeping of the register of directors and the register of company secretaries under the new CO?

 
Answer:

Yes. The register of directors (section 641) and the register of company secretaries (section 648) may be kept separately under the new CO. For the transitional and saving arrangements in relation to this change please refer to Schedule 11 sections 114 and 117. The registers may be kept at the company’s registered office or a place prescribed by the Company Records (Inspection and Provision of Copies) Regulation (Cap. 622I) (sections 641(3) and 648(3)). The place prescribed by the Regulation is a place in Hong Kong.

 

The particulars in respect of a shadow director are no longer required to be contained in the register of directors under the new CO. For the transitional and saving arrangements in relation to this change please refer to Schedule 11 section 116.

 

If the company secretary is a natural person, the requirement in the old Ordinance for the register to contain the company secretary’s “usual residential address” is replaced by a requirement to contain the company secretary’s correspondence address (section 650(1)(a)). For the transitional and saving arrangements in relation to this change please refer to Schedule 11 sections 118 to 119.

 
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Q20.

Are there any major changes in respect of the keeping of an overseas branch register under the new CO?

 
Answer:

The licence system for keeping a branch register under section 103 of the old Ordinance was abolished and replaced by a notification system which requires a company that keeps a branch register outside Hong Kong to notify the Registrar of Companies of the address where the branch register is kept and of any change in the address or the discontinuation of the register within 15 days (sections 636 and 639). Instead of the requirement in the old Ordinance to keep a branch register in a place at or near which the company transacts its business outside Hong Kong, section 636(1) of the new CO provides that a company having a share capital may keep in a place outside Hong Kong a branch register of its members resident there if it is authorised to do so by its articles.

 

A company that keeps a branch register outside Hong Kong must, within 15 days after an entry is made in the branch register, transmit a copy of the entry to its registered office and update the duplicate of the branch register which must be kept at the place at which the company’s principal register is kept (section 637).

 

If a company discontinues a branch register, the entries in that register must be transferred to some other branch register kept in the same place outside Hong Kong or the company’s register of members (section 639(2)).

 
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(III)

Company Records (Inspection and Provision of Copies) Regulation (Cap. 622I) (“CR(IPC) Reg”)

 
Q21.

What is the CR(IPC) Reg for?

 
Answer:

The CR(IPC) Reg is one of the regulations made under the new CO. This Regulation provides the arrangements and procedures concerning company records kept by a company in the following aspects – (i) the place for keeping of records; (ii) the inspection of records; and (iii) the provision of copies of records.

 
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Q22.

Does the CR(IPC) Reg apply to all records kept by a company?

 
Answer:

No. The CR(IPC) Reg applies only to those company records which the new CO has identified and stipulated as being subject to the CR(IPC) Reg. For example, it covers register of members, register of directors and register of debenture holders but it does not apply to accounting records, which are governed by sections 373 to 378 of the new CO.

 
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Q23.

We know that under the old Ordinance, certain company records (e.g. register of members) must be kept at the registered office of the company, or at a place where the records are made up. Is there any change to this requirement?

 
Answer:

Yes. The CR(IPC) Reg allows the keeping of company records at any place in Hong Kong if, under the relevant provisions in the new CO (e.g. section 628 for keeping of a register of members), that type of company record may be kept at a place prescribed by regulations made under section 356 or 657 of the new CO.

 
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Q24.

Are there any major changes to the inspection arrangement of company records?

 
Answer:

The new regime is largely the same as the old one. In respect of the inspection of company records (where the relevant provisions in the new CO have provided that the inspection is subject to regulations made under section 356 or 657 of the new CO), the obligation for companies to make available company records for inspection follows that under the old Ordinance, and the records must be made available for inspection by any person entitled to inspect those records under a relevant provision during business hours, subject to reasonable restrictions that may be imposed by the company by resolution, as long as at least two hours per day are allowed for inspection.

 

The CR(IPC) Reg provides that a request for inspection must identify the type of records being sought and the date on which they were made (or the period covered). The CR(IPC) Reg also provides for the right to make copies of the records concerned during inspection.

 
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Q25.

Do I need to pay any fee to inspect the company records?

 
Answer:

The inspection fee, which usually applies in the case where the requestor is not a member of the company, has been standardised at $50, as compared to the range of $1 to $2 under the old Ordinance.

 
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Q26.

Can the company charge a higher or lower fee for inspection?

 
Answer:

The company cannot charge a higher fee but may charge a lower fee or charge no fee.

 
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Q27.

Are there any major changes to the requirement on the provision of copies of company records?

 
Answer:

Yes. For the provision of copies (where the relevant provisions in the new CO have provided that copies of the relevant records may be provided subject to regulations made under section 657 of the new CO), the two key elements are the lead time for responding to a request and the fees payable for the copies by the requestor. The lead time is standardised in all cases as 10 business days (with general holidays and days of inclement weather excluded) as compared to the range of 7 to 20 calendar days under the old Ordinance.

 

As regards the fees payable, the calculation basis has been modified and the fees are to be calculated according to the number of entries in the case of a register (at $5 for every 10 entries within the first 2,000 entries requested, to be followed by $1 for every 100 entries thereafter) or otherwise the number of pages in the case of records other than registers (at $5 per page), instead of the approach of using the number of words as the calculation basis under the old Ordinance.

 
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Q28.

Can the company charge a higher or lower fee for providing copies?

 
Answer:

The company cannot charge a higher fee but may charge a lower fee or charge no fee.

 
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