Hong Kong Company Maintenance and Compliance Guide (10) - Internal Management

Directors and Board Meetings

Responsibility for the overall management of a Hong Kong company typically rests with its board of directors . Generally, the board authorises the actions of the company through board resolutions passed at board meetings or, if authorised by the articles, by written resolution signed by all the directors or a stated proportion of them.

There is no requirement that board meetings be held in Hong Kong or at any specific intervals. Normally, reasonable notice of meetings must be given to each director, but the Articles of Association can modify this general obligation. The board of directors may delegate its powers to certain persons. A certain degree of delegation is, so far as third parties dealing with the company are concerned, normally implied in the case of managing directors and senior employees of a company.

Shareholders and Shareholder Meetings

Certain decisions however must, by law, be made or sanctioned by the shareholders in general meeting. This is done by the passing of an ordinary or, in some cases, a special resolution. Such resolutions may be proposed as special business at annual general meetings or at separately convened meetings, called extraordinary general meetings.

An ordinary resolution requires a simple majority of the shareholders who attend and vote at a meeting to approve it. A special resolution , on the other hand, requires a 75% majority of the shareholders who attend and vote at a meeting to approve it.

Generally, 14 clear days' notice is required for a meeting at which an ordinary resolution is proposed and 21 clear days' notice is required for a meeting at which a special resolution is proposed or for the holding of an annual general meeting. A majority in number of shareholders having the right to attend and vote at general meetings who together hold not less than 95% in nominal value of all the shares, or all the shareholders in the case of an annual general meeting, may agree that a meeting be held at short notice.

The Articles of Association should make provision for the quorum and voting rights and will determine whether or not the chairman of the meeting has a casting vote. There is a statutory right on the part of a shareholder to appoint a proxy to attend and vote on his or her behalf at any meeting at which the shareholder is entitled to attend and vote. A statement to this effect must be included in the notice of each general meeting. A proxy need not be a member and will have the same right to speak at the meeting as his or her appointor. A corporation which is a member can attend a meeting by appointing a representative to attend the meeting on its behalf. Such a representative can speak and vote on a show of hands or on a poll. A proxy's rights to vote are limited to voting on a poll unless the Articles provide otherwise. It is usually necessary to lodge appointments of proxies (but not of corporate representatives) in advance of the meeting.

A Hong Kong company's Articles of Association will usually permit resolutions to be passed by a written resolution signed by all the shareholders, without the need to hold a meeting, however notice of written resolutions must be provided to the auditors at or before the time of submission to members for signature. (Every company must hold a general meeting as its annual general meeting each year. This may not be done by written resolution.)

Single Member Company

Where a private company only has one shareholder and that shareholder takes a decision that may be taken in a shareholders' meeting, the decision shall be evidenced by a written resolution or a written record of the decision which must be delivered to the company within 7 days of the decision having been made.

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