FSTB proposals to promote paperless corporate communication

Background

The Financial Services and the Treasury Bureau (FSTB) published a consultation paper on 27 November 2023, recommending amendments to the Companies Ordinance (Cap. 622) (CO) on the mode of dissemination of corporate communication of Hong Kong companies (Proposed Amendments). The consultation period will end on 26 January 2024.

Existing requirements on corporate communication

Pursuant to section 833 of the CO, express or deemed consent must be obtained from shareholders before companies disseminate corporate communication by means of website, which is subject to a further notification requirement, where companies are required to notify the shareholders of any new uploads to their websites. However, if electronic contact details of the shareholders are not available, under the aforementioned notification requirement, companies are required to notify such shareholders by hard copy communications, which may lead to considerable paper consumption.

With effect from 31 December 2023, pursuant to the amendments to the Listing Rules by The Stock Exchange of Hong Kong Limited (Stock Exchange), listed companies must disseminate corporate communication to their shareholders electronically to the extent permitted by applicable laws and regulations and their constitutional documents. The amendments will enable listed companies to rely on an implied consent mechanism for dissemination of corporate communication whereby there will be no need to seek consent and notify the shareholders each time new corporate communication is disseminated on the websites of listed companies.

Proposed Amendments to the CO

To further promote paperless corporate communication for both Hong Kong listed and non-listed companies, the FSTB recommends the following Proposed Amendments to the CO:-

• Introduction of implied consent mechanism: The FSTB proposes to allow Hong Kong incorporated listed and non-listed companies to rely on the implied consent mechanism. This will mean that, provided that the articles of association of the Hong Kong listed and non-listed companies allow the dissemination of corporate communication by means of website, there will be no need to seek consent from individual shareholders regarding the same.

• Streamlined notification requirements:

  • For listed companies, the FSTB recommends to remove the need to send separate notifications to shareholders on new uploads of corporate communication to their websites if companies choose to adopt the implied consent mechanism. Shareholders are encouraged to make use of the News Alert service on the Stock Exchange's website for updates.

  • For non-listed companies, the FSTB recommends such companies to obtain one-off prior express consent from shareholders to waive the need to send separate notifications whenever new communications are uploaded to the company's website. 

• Mandatory first-time notifications: In order to safeguard the interests of shareholders, the FSTB recommends that before adopting the aforementioned implied consent mechanism, both Hong Kong listed and non-listed companies will be required to issue a first-time notification to each shareholder individually in hard copies or electronically. This is to inform the shareholders of the new arrangements of dissemination of corporate communication by means of website and to solicit their email addresses (where applicable).

Notwithstanding the above, shareholders may still request hard copies of corporate communication anytime pursuant to section 837 of the CO.

Conclusions

The FSTB will consider the comments received in the public consultation in finalising the Proposed Amendments. It is anticipated that an amendment bill will be introduced to the Legislative Council in the second half of 2024.

The FSTB's Proposed Amendments to the CO on the dissemination of corporate communication demonstrate the Government's endeavours in achieving an environment-friendly business environment. Together with the green initiatives introduced by other regulators, including the Stock Exchange and the Securities and Futures Commission, Hong Kong is making further progress in establishing itself as a global green hub.