Introduction

With a new wave of COVID-19 pandemic hitting both the People’s Republic of China and Hong Kong SAR, listed issuers in Hong Kong have again raised considerable concern on the timely publication of results announcements and holding of general meetings. In view of the tightening of social distancing measures by the Hong Kong Government, the Securities and Future Commission (the “SFC”) and The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) provided an update on the Frequently asked questions on the Joint Statement in relation to the Results Announcements in light of Travel Restrictions related to the Severe Respiratory Disease associated with a Novel Infectious Agent and holding of general meetings (the “Updated FAQ”).

Will listed issuers be required to halt trading if they can only make a results announcement based on unaudited management accounts?

In the Updated FAQ, the Stock Exchange maintained its approach that it will not normally suspend trading of securities of a listed issuer with 31 December financial year simply because the listed issuer failed to provide an audited results announcement by 31 March. In the Further Guidance on the Joint Statement in relation to Results Announcements in light of the COVID-19 Pandemic released by the SFC and Stock Exchange on 16 March 2020, listed issuers should disclose in their unaudited results announcement the following information which includes:

1.        key financial figures such as assets, liabilities, income and expenses, and changes in shareholders’ equity;

2.        narrative discussions of its financial position and performance during the year to supplement the financial figures provided, including the impact of any material events and any material transactions that have taken place; and

3.        an explanation on how and why the travel and other restrictions have affected the listed issuer’s ability to meet its reporting deadline.

In addition, the listed issuer should state that the results have not been agreed with its auditors, provide reasons for the lack of agreement with its auditors, the expected date that the results may be agreed with the auditors and state whether the results have been agreed with its audit committee, and if not, details of the disagreement with its audit committee.

Nevertheless, listed issuers and their directors should always act diligently and reasonably in preparing the accounts and disclose the available information as much as possible. Listed issuers should also ensure that the information contained in the results announcement is accurate and complete in all material respects and not be misleading or deceptive in accordance with the Rule 2.13(2) of the Rules Governing the Listing of Securities on the Stock Exchange (the “Listing Rules”).

Subsequently, listed issuers should make further announcements when the auditors agree with the unaudited results in the results announcement or if not, publish a revised results announcement with an explanation on the adjustments made.

Can listed issuers hold a physical annual general meeting?

Under the Listing Rules, listed issuers should lay financial statements before its members at its annual general meeting (“AGM”) within six months after the end of the financial year or accounting reference period.

In the Updated FAQ, the Stock Exchange stated that it may waive the requirements of the Listing Rules and allow listed issuers to postpone the convening of an AGM on a case-by-case basis, provided that the waiver will not result in contravention with their own articles of association or the law in the jurisdiction in which the listed issuer is incorporated.

Regarding the requirement on the format for general meetings, listed issuers are reminded to comply with the company laws of the jurisdiction in which the listed issuer is incorporated and the requirements of their articles of association. While the Listing Rules do not provide specific requirements on the format for general meetings, the Stock Exchange’s Guide on General Meetings provided that general meetings should be held at a place and a time convenient to the largest possible number of shareholders to attend and the listed issuers should consider the use of technology to maximise shareholder participation. 

On the other hand, listed issuers should also note the restrictions as to holding of a general meeting in Hong Kong under the Prevention and Control of Diseases (Requirements and Directions) (Business and Premises Regulations) (Cap 599F of the Laws of Hong Kong) (“Cap 599F”) and the Prevention and Control of Disease (Prohibition on Group Gathering) Regulation (Cap 599G of the Laws of Hong Kong) (“Cap 599G”). Currently, physical general meetings held in Hong Kong falls under “specified event” and are prohibited for a period of 14 days on 24 March 2022 to 6 April 2022 under Cap 599F. If it is necessary to hold an AGM in Hong Kong during such period, listed issuers should consider holding an AGM by electronic means. In this connection, listed issuers should ensure that the AGM held by electronic means would not deprive the shareholders of their right of attending the AGM. It is suggested that the AGM held by electronic means must still afford the shareholders and all persons participating in the meeting to communicate with each other simultaneously and instantaneously and allow the shareholders to raise questions to the directors and auditors of the listed issuers.

Conclusion

The listed issuers should bear in mind the information they are required to disclose in an unaudited results announcement and the follow-up announcements on the auditors’ view. As the development of the outbreak of the COVID-19 changes quickly, listed issuers should pay attention to the possible changes in the restrictions from holding the AGM in Hong Kong in the near future.