Prevention and Control of Disease (Prohibition on Group Gathering) Regulation

20 April 2020, Construction, by Genevieve Lam,

As part of the measures to combat COVID-19 and promote social distancing, the Government introduced the Prevention and Control of Disease (Prohibition on Group Gathering) Regulation (Cap. 599G) (Regulation) which became effective on 29 March 2020.

According to the announcement by the Secretary for Food and Health on 8 April 2020, the prohibition of group gatherings with more than four people in public places under the Regulation remains in force until 23 April 2020.

Exemption

The Regulation has a list of exemptions under Schedule 1. In particular, paragraph 11 exempts “any group gathering at a meeting of a body that must be held within a specified period in order to comply with any Ordinance or other regulatory instrument that governs the operation of the body or its business.”

General meetings of companies

Listed companies

The Securities and Futures Commission and The Stock Exchange of Hong Kong Limited (SEHK) issued a Joint Statement in relation to General Meetings in light of the Regulation on 1 April 2020.

It is now clear that annual general meetings as required under the Companies Ordinance (Cap. 622) and/or the Main Board Listing Rules or the GEM Listing Rules are in general exempted under Paragraph 11. 

As to extraordinary general meetings and special general meetings of Hong Kong-listed issuers, the Joint Statement specified that these meetings are exempted under Paragraph 11 if the meeting must be held within the specified period in order to comply with:-

(1) 

any law or regulation in Hong Kong or overseas that is applicable to the listed issuer or a subsidiary of the listed issuer (as part of the listed issuer's business);

(2) 

any Main Board Listing Rules or GEM Listing Rules or The Codes on Takeovers and Mergers and Share Buy-backs;

(3) 

the issuer's own memorandum or articles of association; or

(4) 

other regulatory instrument.

The SFC and SEHK also issued guidelines relating to the timing of the general meetings and the manner in which such meetings are to be held.

The guidelines include the following:-

(1) 

adjournment or delay of general meetings for a reasonable period until the end of the specified period;

(2) 

management of physical meetings, such as taking precautions to ensure safety of attendees of physical meetings; and

(3) 

keeping investors and other stakeholders informed of the general meetings which have  been called and publish announcements where necessary.

It is uncertain whether an extraordinary general meeting must be held within a specified period and therefore falls within the exemption in paragraph 11. Although the Regulation provides for a defence if a person has reasonable excuse for participating, organising or allowing the taking place of the general meetings under section 7, companies should take the above guidelines into consideration when deciding whether a general meeting should be called.

Non-listed companies

If a company’s articles of association allows for general meetings by means of audio communication equipment, a company should consider using videoconferencing or other telecommunication facilities to ensure the identity of all shareholders can be verified.

In addition to the specific content that must be included in a notice of general meeting under section 576 of the Companies Ordinance, the notice should also specify the meeting arrangements, such as the access code for virtual general meetings.

If the articles are silent on the mode of extraordinary general meeting or only provide for physical meetings, the company may encourage shareholders to vote by appointing the chairman of the meeting as the proxy to vote for or against the specific resolutions on behalf of the shareholders. However, some shareholders may prefer to ask the directors questions at general meetings before they decide to vote for or against a resolution. Then perhaps a better option is to adjourn or delay the meetings.

Meeting in private place?

It is uncertain whether a meeting held in a private place falls outside the ambit of the Regulation. According to section 2 of the Regulation, public place (公眾地方) means a place to which the public or a section of the public may or are permitted to have access from time to time, whether by payment or otherwise. One may argue that if a general meeting is held in a private property which does not allow access by members of the public from time to time, it may not be caught by the Regulation.