The significance of performance evaluation in a company’s growth is undeniable. Reflecting on the past improves the future; this is where the Annual General Meeting (AGM) comes into play, providing an opportunity for the directors and shareholders to review the work of the company and to report on performance in the previous year in the meantime.
In this article, we will go over the AGM procedures for Hong Kong companies, focusing on the Private Limited Company. Before we get into the specifics of running an AGM, let’s define what an AGM is.
Related Read: Why is a Private Limited Company Popular in Hong Kong?
What is an Annual General Meeting?
According to the Companies Ordinance, every company in Hong Kong is required to hold at least one general meeting per year, also known as the Annual General Meeting. In general, companies must hold an AGM within 9 months of the financial year-end (FYE) and once per financial year.
The current COVID-19 pandemic begs the question, “Do AGMs have to be held in person?” If you’re wondering if it’s possible to hold a virtual AGM, the answer is yes! Companies are permitted to hold AGMs using web conferencing services, but you must ensure that all shareholders can listen, speak, and vote at the meeting. If all shareholders agree to replace the holding of an AGM with a written resolution, you must send copies of the financial statements to the shareholders and seek approval instead of holding an AGM.
How to conduct an Annual General Meeting?
It is important to note that both board meetings and AGMs are required to meet the quorum in accordance with the company’s articles of association.
5 Main Steps to Run an AGM Effectively:
Step 1: Convene and hold a board meeting
- approve the audited financial statements as well as the directors’ and auditors’ reports for presentation to the shareholders’ meeting
- recommend the payment of dividends for each class of shares
- note the re-election of the directors who are retired by rotation, if any, and fix their remuneration
- note the re-appointment of auditors and fix their remuneration
- pass resolutions giving the directors general mandates to allot shares other than on a pro-rata basis, to repurchase shares and to re-issue shares being repurchased
- authorize the convening of an AGM and the issue of a notice of the AGM to the shareholders
Step 2: Write up the minutes of the board meeting
- The board minutes should be signed by the company’s chairman and distributed to all directors for their records.
Step 3: Despatch the notice of the AGM and the audited accounts to the shareholders
The notice of the AGM must be sent to the shareholders of the company, stating:
- the date, time, and place of the meeting
- the agenda to be discussed at the meeting
- the resolution(s) intended to be moved at the meeting
Step 4: Hold the AGM according to the agenda
- Receipt and adoption of the audited accounts and reports of the directors and auditors
- Declaration of dividends (if any)
- Re-election of directors in place of those retiring, if any, and the fixing of their remuneration
- Re-appointment of auditors and the fixing of their remuneration
- Approval of resolutions giving the directors general mandates to allot shares other than on a pro-rata basis, to repurchase shares, and to re-issue shares being repurchased
Step 5: Write up the minutes of the AGM
- The AGM minutes should be signed by the chairman of the company and circulate to all the shareholders for their records.
Related Read: How Does a Foreigner Startup a Business in Hong Kong?
Conclusion — Where to Next for Your Coming AGM?
AGMs must be held to exercise the functions of information reporting, decision making, and discussion facilitation as well as to provide a channel of communication between the company and the shareholders about how the company is performing.
If the prospect of holding an AGM seems daunting, it is always a good idea to shop around and reach out to experienced and trusted company service providers to make the process hassle-free.
At Hong Kong Company Registration, we provide you with an expert professional team of company secretaries who can help you meet the compliance requirement of holding the AGM while also saving you time and potential headaches on any company secretarial issue.
Frequently Asked Questions in AGM
- Is it necessary for a dormant company to hold AGMs in Hong Kong?
- No, because dormant companies in Hong Kong should not have started any business, an AGM is not required until the company becomes active again.
- Is it necessary to hold an AGM if the company only has one shareholder?
- No, an AGM is not required. AGMs are suitable for companies with more than one shareholder because they allow shareholders to vote on and approve resolutions while also keeping them up to date on the company’s performance. Instead, sole shareholders can approve the resolutions in writing.
- When will the notice of the AGM be delivered to the company’s shareholders?
- The notice must be delivered to shareholders at least 21 days prior to the AGM.
- Is it necessary to make any special AGM arrangements in Hong Kong in light of the COVID-19 pandemic?
- To comply with the Hong Kong government’s requirement for disease prevention and control, the company should take the following precautions during the physical AGM:
- Body temperature monitoring and the use of face masks are required.
- Maintaining a sufficient physical distance from each party of at least 1.5 metres
- Preparing the hand sanitisers and sanitizing mats at the venue
- Food and beverage service should not be provided
- No corporate gifts should be distributed at the meeting
- Reduce the number of physical attendees by allowing others to participate via telecommunications.
Other than the above precautions, you can take more practicable measures to better ensure the safety of the attendees.
Trust our qualified corporate secretaries to handle your Annual General Meeting effectively
With our help, you can meet the deadlines, maximise your benefits, and minimise your headaches.