Entrepreneurs and start-ups
As at December 2019, there were more than 340 000 small and medium sized enterprises (SMEs) Of the 300,000 enterprises in Hong Kong. These SMEs are said to account for, more than 98% of the total business units in Hong Kong and can be categorized as small and medium size enterprises (SMEs). They employ over 1.2 million staff, representing half of the private sector’s total workforce, and underpin Hong Kong’s continued economic growth and development.
Charltons is committed to supporting the development of entrepreneurs and start-ups in Hong Kong. We provide practical legal advice to help Hong Kong SMEs, start-ups and family run businesses overcome the legal and commercial challenges they may face, thereby facilitating their continued growth and development. Our goal is to establish long standing mutually beneficially relationships with our clients. We provide SMEs with focused legal advice in relation to general commercial matters, employment issues, business structuring, raising finance, venture capital and private equity, bank finance, leasing and hire-purchase arrangements, asset based finance, and government grant funding.
We understand the general needs of SMEs and advise SMEs on positioning to expand their businesses, and eventually on listing. The firm has advised a number of companies across a broad range of sectors from start-up phase through to successful listing on the Hong Kong Stock Exchange.
JV series – Board composition of JV companies
In 50/50 joint ventures, joint venture agreements will usually provide for the parties to have the right to appoint equal numbers of directors to the board of the joint venture company. The parties may also take turns to appoint the chairman of the board for a specified period and the chairman will usually not have a casting vote. The parties will therefore have joint control of the board of the joint venture and neither party will be able to dictate the joint venture’s direction. However, such joint control may lead to deadlock in the absence of joint venture agreements between the parties.
In joint ventures with a majority shareholder and a minority shareholder, the majority shareholder will usually be permitted to appoint more directors to the joint venture company’s board than the minority shareholder and/or to appoint a chairman with a casting vote. The majority shareholder will therefore have control of the joint venture company’s board. The majority shareholder may also be given the right to appoint named board executives, e.g. the chief executive of the joint venture company.
It is however common for joint venture agreements to provide that all shareholders must be given adequate notice of matters to be discussed at board and/or shareholder meetings and that at least one representative of the minority shareholder must be present at board and/or shareholder meetings in order for the meetings to be quorate. Joint venture agreements should include express obligations on the minority shareholder to procure that its representatives attend board and shareholder meetings, to ensure that the minority shareholder cannot prevent decisions from being taken by failing to attend the meetings at which they are to be discussed. Alternatively, joint venture agreements may include quorum default provisions stating that if a meeting is not held because no quorum is present, e.g. because the minority shareholder’s representative does not attend, the quorum requirements for the subsequent meeting will be reduced so that the minority shareholder’s representative is not required to attend in order for the meeting to be quorate. Even if joint venture agreements do not include any such express provisions, the court may, either of its own motion or on the application of a director or shareholder, call a meeting with altered quorum arrangements to prevent the company’s quorum requirements from being used as a veto.
Charltons is committed to supporting the development of small and medium size enterprises, entrepreneurs and start-ups. We can provide legal advice for Hong Kong SMEs to help overcome the legal and commercial challenges they may face.