Dear members, graduates, students and stakeholders
COVID-19 – Annual General Meetings (AGMs) pandemic concerns (second update)
Following the Institute’s communications on 31 March 2020 and 9 April 2020, we wanted to take this opportunity to provide you with a further update as the AGM season is fast approaching. The capitalised terms are as used in the earlier communications.
As a reminder, this is not the time to let down your guard as to social distancing which remains a highly effective way to fight the spread of the COVID-19 pandemic. Understanding this, the Institute has continued to highlight to the Government and regulators the risks associated with large groups of persons congregating together at upcoming AGMs and/or General Meetings where these are required to be held physically (given exemption 11 to the Regulation) (“Meetings”).
The Institute has provided a number of ideas to the Government and regulators in terms of how this issue could be addressed – based on our experience and on steps that other jurisdictions are taking. Ideas put forward have included: Government direction (via legislation or otherwise) for voting at Meetings to be by proxy only (with separate arrangements to be made for Q&A and for shareholders to view proceedings); Government direction (via the Regulation or otherwise) for the number of attendees at Meetings to be limited (providing a legal basis for companies to turn away people in excess of this number); and/or for companies to be given a longer period of time to hold their Meetings.
Clearly, none of these solutions are ideal, as attendance at Meetings is a fundamental shareholder right and Meetings present an important opportunity for shareholders to interact with the Board and Management. However, unprecedented challenges require unprecedented solutions and we are pleased to have been able to contribute to the Government’s thinking in this area and their assessment of the overall situation, which is changing from time to time – might Hong Kong experience a third wave of infections, for example?
Accordingly, and in the meantime, the Institute once again reminds all governance professionals involved in arranging Meetings to consider, and adopt, where appropriate, the measures set out under the Institute’s earlier communications. Below for your reference, please see the AGM circulars of some listed companies:
In addition, CLP Holdings has, based on specific provisions in its articles, limited to 50 the number of attendees at its upcoming AGM, with a balloting system introduced in case of oversubscription:
The Institute would like to take this opportunity to remind governance professionals to be mindful that, in the absence of specific mandatory legal restrictions and/or rights under articles, taking an aggressive procedural approach to limit the rights of shareholders to attend Meetings and leaving them with no choice in attending Meetings but to vote by proxy instead is not good governance. Instead, companies should work to explain to shareholders the risks associated with the spread of COVID-19 if they come together to attend Meetings and seek to persuade them not to attend and instead to vote by proxy.