Corporate decisions without meeting and methods to record company’s minutes of meeting after company formation HK


There are ways through which meetings can be avoided and important matters be decided without the need of invoking such informality. After getting the alternatives we would investigate the ways to record the proceedings for future reference or any other use.

Presentation of Written Resolution

Written resolution provides for the way through which any matter could be sought out without the need of calling general meeting. Any matter which could have been decided in general meeting can be brought into consideration through written resolution, provided that matter does not involves the removal of any auditor, director’s termination before the conclusion of his or her term. Under Cap.622 directors reserve the right to put forward written resolution and those members who holds more than 5% of total votes in company, can vote on the fate of resolution. But, Section 551 of Cap.622 allows members to request company to circulate their proposal with written resolution.

Company is bound under statutory obligation which makes it compulsory to send the proposed resolution and statement of members(s), if any, within 21 days of coming Section 553(1) of Cap.622 into effect, on company’s expense to each member. This ordinance however entails that when it becomes necessary to send documents to the members, general perception says this deadline to be at the time when company received sufficient number of requests, above its threshold, by members to circulate their proposal with written resolution. Sending the copy of proposed resolution to the auditor is counted as the statutory duty of the company.

A written resolution is passed when all the members have endorsed it with their signatures. When the company receives written resolution along with confirmation of member’s endorsement or authorisation, resolution will be considered signified and passed.

Proposed written resolution will be considered expired if it not has been passed within the time frame determined by company’s articles. If company’s articles do not mention any time period then it is the standard rule to get the proposed resolution passed before the 28th day of its circulation. Section 559 of Cap.622 bounds company to send it to the members after it has been passed, failure to do would be considered as an offence on the part of the company and every responsible person for such offence.

It is possible for the company to constitute its own procedure regarding approval mechanism of written resolution that if it feels any ambiguity it can either relax up the provisions or make it more descriptive but cannot bring down the member’s threshold for its approval, that is, it can make the requirement of approval from all members to some proportion of members. Otherwise, company is open to constitute its own set of rules in this matter.

Deciding matters without meeting not only saves time but also involves monetary benefit as well as avoidance of formality of arranging the general meeting. May be that is the reason that it is the popular mode of business transactions in small companies as they can have their matters decided abruptly without the need to invest more time and money in issuance of notices then its delivery to every member and then the arrangement to general meeting.

Matter of Unanimous Consent

Unanimous consent is an alternative to both written resolution and general meeting. The concept is widely explained by Buckley J in Re Duomatic Ltd as:

“Where all members of the company show consent to the particular matter, which has the sanctity to be discussed in general meeting, then upon the consent of each and those member who has the voting right is general meeting, that particular matter becomes bounding on the company to let it come into effect”.

Legal commentators put a very valid question on the jurisdiction of principle of unanimous consent and they question that should this principle be applied wherever it fits after HK business registration? or it is just to waive the procedural requirement. The question was quite well answered by Meagher JA in Herrman’s case, while commenting on Duomatic Principle, Hon’ble Meagher JA communicated that:

“This principle focuses on the discounting of procedural requirements and formalities and nothing but a principle of waiver”.

There are also the legal cases which reports of taking it as per the view totally contradictory to what Meagher JA took. It seems as if court is not able to determine the grounds on which it could be apply and the real essence of this doctrine is still unclear. However, we will discuss some of the procedural aspects of this “unanimous accent doctrine”.

There is the need to understand that who are the ones whose consent is needed in order to affirm the application of “unanimous accent doctrine”. Firstly, the consent of registered shareholder, not the beneficial owners of shareholders, is required and secondly the consent of the members who have the right to vote and attend general meeting is required. The unanimous consent would not be considered effective unless members are informed about its content and effects of the proposal have been properly communicated to them.

Statutory Requirements of the Written Resolutions and its Relevance with the Unanimous Assent Doctrine

It is observed that written resolution gives the Unanimous Accent Doctrine a statutory footing. But still Written resolutions has an advantageous edge as the doctrine of unanimous assent only provides with procedural waiver. While the Written resolution is an alternative to general meeting because what could have been done in the general meeting, could be done with written resolution, with no need to even arrange meeting. This argument can be win with the support of the common law, because as per common law, company will be bound to the informal assent of members indicated or authorised without meeting, without the need to involve in procedural formalities.

The conclusive arguments sum up the situation and confusion with the argument that not all formalities can be waived by members. On such example is Section 670 of Cap.622, used for HK business registration, which deal with the scheme meeting for member’s scheme arrangement proposals. The decisive mechanism under this provision relies on court and thus meeting can be organised with judicial orders. Judicial control on such meetings is to ensure the legality and protection of rights of all the stakeholders of this scheme.

Recording Minutes of Meetings

Keeping the record of company’s minutes of meeting keeps the members, shareholders and other linked people or entities informed with the proceedings of the meetings and ensures transparency and betterment in company’s governance system. Young J in John Star case put forward some of the major constituents of minutes of meetings. According to his observation, minutes of meetings should have:

  • Time, type and nature of the meeting.
  • Complete and accurate record of all the passed resolutions and list of those who were present in the meeting.
  • Record of all the appointments that were made in the meeting and the terms of their appointments.
  • Significant incidents of the meetings.
  • Time, the meeting was concluded and the scheduled venue and time of next meeting.

It is an obligation of the company to keep the record of all the predecessor general meetings. Same rule applies on the aspirants setting up sole proprietorship in Hong Kong and record of all the decisions taken by the person setting up sole proprietorship in Hong Kong should be recorded. As per Section 655 of Cap.622, record can either be maintained in hard form or electronic form. For electronic records, company must ensure its reproduction in hard form too. Section 656(1) states that where the record is to be kept in bound books, company must fulfil its statutory obligation to prevent falsification of the records.

It is required to keep the company’s minutes of meetings at the registered address of the company. Section 618(2) of Cap.622 emphasise on keeping the record of meetings minutes for next 10 years, starting from the day meeting was concluded. Minutes of meetings should readily be available in company’s premises to remain open for inspection by company’s members, free of cost. The members can inspect company’s minutes of meeting after the payment of the prescribed fee and on request and thus are entitled to get the copy of the minutes of the meetings. However, now members are allowed to make copies of minutes of meetings at their own expenses during inspection.

Minutes of meetings are basically the evidence of the proceedings of the meetings because it has been signed and authorised by the chairperson of the meeting. Legal commentators questioned that does really signatures of chairperson make the minutes, conclusive evidence of the meeting? The answer was found to be that if the company’s articles says them to conclusive then they will and none of their content could be challenged until and unless it has been duly established that provided circumstances are wrongly interpreted and was just to set up the story which does not have any factual background.

Electronic Mode of Communication

The practiced and used mode of communication between the company and the shareholders was found to be either the postal service or in person. However, modernisation of technology did bring revolutionary inventions, but their validity is always been an issue as authenticity requires an extra step of verification. But, fax seems to be the one permissible and effective modern mode of communication.

Cap.622 did accommodated modern modes of communication. These provisions allowed the sending of documents electronically for:

  • Circulation of a written resolution.
  • Call notice for the general meeting.
  • Member’s request to circulate their proposal with written resolution.
  • Signatures on the proposed written resolution.
  • Member’s request to circulate resolution for Annual General Meeting.

Electronics communication has many advantages as it saves the company from the cost of printing or postage stamps. Document can reach the concerned person much quicker than by post or in person. Moreover, it allows the member to look for their section of interest and for future reference they would only those sections or page which are the matters of their subject.

Probability of Procedural Irregularity

While conducting and calling general meeting, certain procedural irregularities may occur. The prominent of them will be the company’s failure to send notices to many of its shareholders. Other procedural irregularity would be the member’s failure to deposit proxy forms within the stipulated time at the company’s address as per the instructions of the company’s constitution, instead of sending the proxy forms to the company 48 hours before the meeting, were sent back to the sender.

Such procedural irregularity not only contaminates the professional services instead they raise questions on the validity of the meeting’s proceedings and decisions. As the Companies Ordinance (Cap.622) does not has any provision to deal with such procedural irregularity for Hong Kong company establishment. Help of common law is being taken to solve such matters of procedural irregularity.

It is noted that, irregularities on the part of the company’s internal governance can be rectified by the majority shareholders of the company in properly regularised meeting, provided any decision of majority does not imply any offensive or fraudulent intention. Same goes for the failure to send call notices to the certain members of the company and legal commentators thinks that this irregularity is not of that extent which may result in considering general meeting’s proceedings invalid.

Irregularity cannot be applied in the situation where the subjected matter is rather of oppression but not of an irregularity within Hong Kong company establishment internal governance and managerial structure.

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