The HKSAR Government has enacted the Prevention and Control of Disease (Prohibition on Group Gathering) Regulation (Cap. 599G of the Laws of Hong Kong) which became effective on 29 March 2020, to promote and maintain social distancing in light of the COVID-19 pandemic. A Joint Statement in relation to General Meetings in light of the Prevention and Control of Disease (Prohibition on Group Gathering) Regulation issued by the Hong Kong Stock Exchange and the Securities and Futures Commission on 1 April 2020, set out certain guidelines for deciding on the timing of their general meetings and the manner in which such meetings are to be held.
A notification was issued on 24 March 2020 by the Ministry of Health of Singapore (“MOH”) stating that all events and mass gatherings must be deferred or cancelled regardless of size. The joint statement issued on 25 March 2020 by the Accounting and Corporate Regulatory Authority (“ACRA”), the Monetary Authority of Singapore (“MAS”) and the SGX RegCo stated that all listed issuers are expected to comply with the MOH’s safe distancing measures, and that legislative amendments are being proposed for the Singapore Parliament sitting in April 2020, in relation to the conduct of meetings (which include allowing issuers the flexibility to hold meetings by virtual means). The Ministry of Law of Singapore and the Ministry of Finance of Singapore will be proposing legislative provisions to provide legal certainty on holding of meetings.
Annual general meetings
The Companies Act 1981 of Bermuda (as amended) requires Bermuda companies to hold an annual general meeting in each calendar year, unless a resolution has been passed in a general meeting to dispense with the holding of the annual general meeting. On the other hand, the Companies Law (as revised) of Cayman Islands does not contain any requirements for the holding of annual general meetings.
Irrespective of whether there are statutory requirements to hold annual general meetings, it is common for companies’ bye-laws or articles of association (as the case may be) to contain an express requirement to hold an annual general meeting in each calendar year. Furthermore, listed companies in Hong Kong and Singapore would mostly contain additional provisions requiring that there are not more than 15 months between the date of one annual general meeting and that of the next. This requirement is for the purpose of complying with the Hong Kong and Singapore listing rules.
Because of the 15 months gap limit, certain listed companies may need to hold their annual general meetings despite the social distancing restrictions. The holding of such meetings can give rise to a number of issues such as to what extent can they implement COVID-19 precautionary measures at the venue of the meeting, e.g. can the company refuse a shareholder from entering the meeting room if such person has a temperature or refuses to wear a mask, and also what are the requirements to enable shareholders to attend the meeting via electronic means.
Companies that do not have such timing restrictions, but would like to postpone their meeting, will need to consider what the proper way to do so is. Postponement of meetings may not be an option if it is not provided for under the bye-laws or articles of association of the company. In such case, the company should send out a notice to all shareholders informing them of the company’s intention to adjourn at the commencement of the meeting and that a new notice of the adjourned meeting will be sent to them when a new AGM date is decided. The company will then proceed with the meeting as per the notice of meeting and arrange for the chairman of the meeting to attend and to adjourn the meeting at the commencement. The requisite quorum will need to be present at the meeting. Although the absence of quorum is also a ground for adjournment, bye-laws/articles of listed companies in Hong Kong commonly contain provisions providing an automatic adjournment of one week in such scenario without allowing the board to determine the adjournment date. As such, it is important for the meeting to have a valid quorum in order for the chairman to propose a resolution to adjourn the meeting sin die (ie. indefinitely) or to a desired date in the future. Bye-laws/articles on adjournment usually would require the “consent of the meeting” which means it has to be voted upon at the meeting.
Delays in holding of annual general meetings could also give rise to other issues. For example, it may result in a potential breach of the retirement by rotation provisions in bye-laws or articles of association of listed companies which often provides that all directors must retire by rotation every three years. Bermuda companies which will be holding their annual general meeting beyond the time limit imposed by the Bermuda Companies Act will need to apply for a sanction from the Bermuda Registrar of Companies before they can hold such meeting.
We have also published an article on the on COVID-19’s impact on AGMs for Bermuda companies, please click here to learn more.
As there are a wide range of potential issues surrounding annual general meetings, we would encourage you to reach out to your relevant Appleby contact to seek assistance and advice.