Despite a strict prohibition on gatherings of more than two persons in any public place in Hong Kong through at least February 17, there is an exemption for shareholders’ meetings of companies listed on the Stock Exchange of Hong Kong, with certain conditions.
Earlier in the COVID-19 pandemic, the Hong Kong Special Administrative Region of the People’s Republic of China (HKSAR) government introduced a new Prevention and Control of Disease (Prohibition on Group Gathering) Regulation (the Group Gathering Regulation), which became effective on March 29, 2020. The Group Gathering Regulation has since gone through a number of iterations, and as of the present, it prohibits gatherings of more than two persons in any public place from February 4, 2021, until at least February 17, 2021 (the Specified Period). Violations are punishable by a fine of up to $25,000 Hong Kong dollars (about $3,225) and imprisonment for six months, subject to certain exemptions. The Specified Period may be further extended by notice published in the HKSAR Government Gazette; given that the pandemic has yet to subside, it is anticipated that the Group Gathering Regulation will continue to remain in force for the foreseeable future.
One exemption under the Group Gathering Regulation is for any shareholders’ meeting of a company listed on the Stock Exchange of Hong Kong (HKEX) (whether incorporated in Hong Kong or a jurisdiction outside Hong Kong, as with most issuers) that is held in accordance with any laws or other regulatory instrument that governs the operation of the company or its business.
For such meetings, no food or drink are to be served and, if there are more than 20 attendees, measures should be put in place for separating the participants in the meeting in different rooms or partitioned areas, each such area accommodating not more than 20 persons.
On April 1, 2020, the Hong Kong Securities and Futures Commission (SFC) and the HKEX released a joint statement, after consultation with the HKSAR government, providing guidance on the conduct of corporate general meetings. While such guidance was issued in the early period of the global pandemic, it nevertheless still remains relevant as considerable volatility and disruption caused by the global pandemic have ensued since the guidance’s publication.
In the joint statement, the SFC and the HKEX stated that listed issuers should consider whether it is possible to adjourn or delay their general meetings for a reasonable period. Listed issuers should consider the following:
Longer adjournment or delay is encouraged by the SFC and the HKEX to allow the listed issuers more time to
Since the guidance’s publication, measures adopted by listed issuers to reduce physical attendance include the following:
Any listed issuers that wish to adopt similar measures should consider whether it is necessary to revise their constitutional documents; it should be noted that there has been an uptick of listed issuers doing so, and it is likely that this trend will continue. This is especially pertinent for listed issuers whose constitutional documents only permit the holding of physical general meetings.
For listed issuers that decide to proceed with a physical general meeting, the guidance is to
Although the Hong Kong listing rules do not impose a requirement on the format of general meetings, listed issuers are reminded to comply with applicable laws of their jurisdictions of incorporation and their constitutional documents. In this connection, it is important to note that an overwhelming majority of listed issuers in Hong Kong—an international financial center—are incorporated in a jurisdiction outside of Hong Kong.
To keep investors and other stakeholders informed, listed issuers that have called a general meeting should, as soon as practicable, publish an announcement to
Further, since the onset of the pandemic, it is worth noting that many listed issuers now include prominent health and safety-related disclosures on the front page of their shareholders’ circulars calling for general meetings. Such disclosures may state the following:
Listed issuers should also communicate their plans to share registrars and the HKEX as soon as practicable.
Our lawyers have experience advising Hong Kong–listed issuers in a wide range of legal and compliance issues. We are closely monitoring new developments that might impact Hong Kong–listed issuers and are able to guide you quickly as needed.
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David C. Schwartz