Board meetings are fundamental to the corporate governance system. They are the predominant way for directors and board members of a company to consider and approve matters affecting its operation and business. Moreover, every company incorporated in Hong Kong is required to hold its annual general meeting (AGM) within six months (for a public company and its group companies) or nine months (for a private company not being a subsidiary of a public company and a company limited by guarantee) after its preceding financial year end, at which its financial statements for that year must be laid before for its shareholders’ consideration.
However, COVID has disrupted the usual schedules of many companies for holding their AGMs, and has made it very difficult for them, if not impossible, to comply with this requirement.
Case study
Headquartered and operating its construction business in Malaysia, a Cayman Islands-incorporated client having its preceding financial year end of 30 September 2019 published a notice to hold its AGM in a venue other than its offices in Malaysia on 31 March 2020.
On 16 March 2020, the Malaysian government announced the Movement Control Order, closing all private premises except those involved in essential services to curb the spread of COVID-19 in the country. The order originally effective from 18 to 31 March 2020, was twice extended to 14 April and 12 May 2020.
As the client’s named company secretary, I acted as the communication channel among the client, the Hong Kong Stock Exchange (HKEX), and the client’s legal advisor. Ultimately, thanks to the HKEX’s grant of a waiver from strict compliance with the AGM requirement after my application on the client’s behalf, I arranged for the holding of the client’s postponed AGM on 2 June 2020 in compliance with the order, the Cayman Islands law and client’s articles of association, which set the first precedent for all other listed companies in Hong Kong to follow subsequently.
Hybrid meetings
A hybrid of physical and virtual meetings at companies are now far more common in the current COVID-19 climate. Facilitators of virtual board meetings have a lot to pay attention to from the planning and design of the meeting, to how to manage the group dynamics. They should also acknowledge how good boardroom practices are even more necessary for virtual meetings than for face-to-face.
Virtual meetings must (i) be convened, constituted and held in strict compliance with relevant laws, rules, regulations and codes; and (ii) be well-structured and avoid unnecessary complexity. Therefore, good preparation is the key to the success of virtual meetings.
About the e-Series course
During an e-Series course entitled “Virtual meetings for directors and members,” I share my corporate governance, company secretarial and regulatory compliance knowledge, experience and insight with Institute members, board members, chief executive officers, company secretaries and those charged with corporate governance functions.
Participants of the course will be able to familiarize themselves with the definition of “meeting,” the various formats of meetings and the amendments to the laws governing the meetings of members of companies incorporated or registered in Hong Kong and elsewhere. They will be able to understand the benefits and major challenges of virtual board meetings, the ways to achieve the validity and enforceability of such meetings, as well as the matters that must be taken into consideration when convening and holding a proper and valid virtual meeting in compliance with the statutory and regulatory requirements. They will also know how to take adequate preventive measures to convene and hold a physical meeting in today’s COVID-19 era, while the chairperson or the organizer of a virtual meeting will be equipped with appropriate techniques to run an orderly and effective virtual meeting.
Seaman Kwok, Founder and Director of SK2 Corporate Services (HK) Limited, is a chartered secretary, chartered governance professional, professional accountant and certified tax advisor as well as a fellow member of The Hong Kong Institute of Directors. Kwok holds a professional diploma in company secretaryship, a bachelor’s degree in arts and a post-graduate diploma in laws and has passed the Common Professional (Laws) Examinations of England and Wales. He has over 30 years’ experience, including in corporate governance and company secretary matters with companies and reputable professional corporate services providers.
