Public consultation on promoting paperless corporate communication for Hong Kong companies launched

In an effort to adapt to digitization, reduce burdens of listed and non-listed companies in Hong Kong as regards the dissemination of documents (e.g. financial reports, prospectus), and align with recent changes of the HKEX’s listing rules, the Financial Services and the Treasury Bureau (FSTB) has launched a consultation on proposed amendments to the Companies Ordinance. Specifically, the FSTB seeks to
(1) Implement an „implied consent mechanism“ for the dissemination of documents of listed and non-listed firms: Under this mechanism, shareholders may receive communications from firms in an electronic form provided that the articles of association of the company provide for such communication. It would no longer be necessary to obtain explicit consent for electronic dissemination from individual shareholders. It shall be noted in this context that dissemination in electronic form thereby primarily includes the upload of relevant documents on a firm’s website.
(2) One-time prior consent for non-listed companies: As non-listed companies don’t have access to the News Alert service provided by the HKEX which allows investors to be notified via e-mail, whats app, or other means of new documents of investee firms, non-listed companies that would choose to adopt the implied consent mechanism for disseminating corporate communications through their website would have to obtain one-time prior express consent from shareholders. Once obtained, this consent would replace the need for separate notifications to shareholders each time new corporate communication is uploaded on a firm’s website.
(3) Shareholder protection: In order to protect the interest of investors, ALL firms – listed or unlisted – which would like to adopt the implied consent mechanism will be obliged to issue a first-time notification to each shareholder individually to inform of their new communication dissemination arrangement. The notification would have to be in hard copy or electronically in case an investor has provided prior consent to electronic notifications. This would allow firms to also collect e-mail addresses of investors for future notifications where such addresses haven’t been available so far. Also, all companies will be required to disseminate at any time company communications in hard copy, if an investor so desires.
—
The consultation closes on January 26, 2024.