HONG KONG INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS Minutes of Extraordinary General Meeting held on Friday, 16 December 2011 on the 27th floor, Wu Chung House, 213 Queen s Road East, Wanchai, Hong Kong at 7:30 p.m. Chairman : Mr. Keith POGSON, FCPA (President) Council Members Present : Ms. Susanna CHIU, FCPA (Vice-President) Mr. Clement CHAN, FCPA (Vice-President) Mr. TSAI Wing Chung, Philip, FCPA (Immediate Past President) Ms. Mabel M.B. CHAN, CPA Mr. Raymond CHENG, FCPA Mr. Ambrose CHEUNG Wing Sum (Appointed lay member) Prof. CHO Lung Pui Lan, Stella, FCPA Mr. Jack S.L. CHOW, FCPA Ms. Ada CHUNG, FCPA (Representative of Financial Secretary) Mr. Dennis HO Chiu Ping, FCPA Mr. DING Wai Chuen, Raphael, FCPA Mr. Stephen LAW, CPA Mr. Doug OXLEY, FCPA Ms. Edith SHIH (Appointed lay member) Apologies : Mr. Andrew FUNG Hau Chung (Appointed lay member) Ms. Catherine K.C. LEUNG (Appointed lay member) Mr. Ronald KUNG, FCPA Mr. LAM Chi Yuen, FCPA Mr. Lesley Y.C. WONG, CPA (Director of Accounting Services) Chief Executive & Registrar Other members present : Ms. Winnie C.W. CHEUNG, FCPA : 157 In attendance : Mr. F.K. Au, Mayer Brown JSM (Institute's legal adviser) Mr. John Hickin, Mayer Brown JSM (Institute's legal adviser) 1. There being a quorum, the Chairman called the meeting to order at 7:35 p.m.. 2. The Notice of the Meeting containing the following proposed Resolution was read out by the Registrar: To consider and, if thought fit, pass a resolution in the terms set out below as formally requested by 166 members of the Institute by way of a "Formal Request for General Meeting" dated 22 September 2011: "To resolve to amend section 4(1) of the Professional Accountants Ordinance CAP. 50 to: "There shall be a President and 2 Vice-Presidents of the Institute, who shall be elected by members of the Institute directly." and all related sections of the Ordinance and By-laws and the Council to undertake all the necessary legislative procedures to enable the abovementioned amendment be properly enacted." - 1 -
3. The Resolution was duly proposed by Mr. Horace Ma and seconded by Mr. Albert Au. 4. Before the Resolution was put to a vote, Mr. Philip Tsai, immediate Past President of the Institute, was invited to reiterate Council's position regarding the proposed Resolution. Mr. Tsai presented the Council's position as set out in a paper dated 24 November 2011 circulated to Institute members. 5. The Chairman informed the meeting that the Council had sought additional legal advice on the Resolution and the lawyers had recently furnished the Council with their views. In short, the legal advice is: (1) The proposed Resolution seeks to give a binding direction to the Council when, as a matter of law, it is incapable of doing that; (2) The proposed Resolution cannot impose on the Council any duty to bring about the suggested amendment to section 4(1) of the Professional Accountants Ordinance because under the Ordinance, the Council is only vested with certain powers and it does not have the power to amend the law; (3) It is not for the Institute in a General Meeting to instruct the Council as to what it is to aim to achieve, its duties being prescribed by the Ordinance and supplemented by the by-laws, or as to how it is to exercise such powers. The meeting noted that as a result, the proposed Resolution would not and could not bind the Council nor could it give the Council any power to bring about the suggested legislative amendment. 6. The Chairman invited members attending the meeting to address the audience if they have further views on the matter. Some members had indicated that they wish to speak at this general meeting and had deposited their completed "Request for speaking at the EGM" forms at the collection boxes. To give a fair opportunity to these members, the speaking order of members was to be determined by drawing of lots from the "For the Resolution" and "Against the Resolution" collection box on rotation. The Chairman requested that members speaking should confine their comments to not more than three minutes. In the interest of time, not more than 90 minutes would be allowed for members to present their views. At the time of drawing of lots, there was no form deposited at the "For the Resolution" collection box. Forms deposited at the "Against the Resolution" collection box were therefore drawn until such time where there was a form deposited at the "For the Resolution" collection box. 7. Mr. Albert Au expressed his deep regret that the Institute had to convene this EGM. Several Council members in support of the proposed Resolution had not explained clearly to Institute members on the complexity and details of the issue but had misled them to believe that the proposed Resolution would be the right way to go by making use of public sentiments on the value of democracy. On an anonymous basis, Mr. Au considered that the behaviour of a Council member not present at this meeting, who wrote newspaper articles making incorrect allegations upon the Institute, was irresponsible as he should have the - 2 -
fiduciary duties to clarify the matter with Institute members, especially at this EGM. In conclusion, Mr. Au pointed out that holding this EGM was unproductive and the Institute should have deployed the resources on other much more important tasks and issues faced by the accounting profession. 8. Mr. Edwin Cheung indicated that he was against the proposed Resolution and did not think there would be a favourable outcome even if the Resolution were to be passed. Traditionally the majority of votes were in the hands of the "Big Four" firms and the academia and because of this, presidency and vice-presidency would likely end up being dominated by members of these sectors. Mr. Cheung remarked that the issue had not yet been resolved and therefore proposed the Council to conduct a consultation among Institute members regarding the issue and at the same time explaining to Institute members the pros and cons of the existing system. For the purpose of fostering more young members as successors to the Council, he suggested the Institute to consider admitting young members as observers at Council meetings, and to appoint more non-council members as chairpersons and vice-chairpersons of various committees and panels. 9. Mr. Gary Poon pointed out that the current two-tier election mechanism of the President and Vice-Presidents, i.e. firstly being elected to Council by all Institute members and then elected as President and/or Vice-Presidents by all Council members, has the advantage of monitoring and evaluating the competency of a candidate from both inside and outside of the Council. The proposed Resolution which seeks to remove the second tier of the election mechanism is considered as a step backward in that this would take away the checks and balances as well as the independent and objective elements of the present election process under which the 4 government appointed and the 2 ex-officio members of the Council are entitled to exercise their voting rights in the President and Vice-Presidents elections. If this second tier mechanism were to be removed, there would be no safeguard of public interests. 10. Mr. Edward Chow asked if any of the 166 petitioners are incumbent members of the Council whom he believed would have the benefit of knowing how the current President and Vice-Presidents election system functions whereas other Institute members would only have known about it indirectly from Council members. He also questioned the absence of any representatives from the 166 petitioners speaking for the Resolution at the meeting. Mr. Chow considered such behaviour a mockery and doubted whether it would still be sensible for the Institute to convene general meetings in the future at the request of some members who have finally chosen to treat this matter lightly and do not even bother to make themselves available at the meeting. 11. Mr. Pang Yuen Fat showed the meeting a newly launched Institute membership card and remarked that the card, which contained no photo of members, could not be used at this EGM registration for identity verification purpose. On a separate note, he considered that the President and Vice-Presidents should have derived their mandate from all Institute members directly rather than from incumbent Council members. Mr. Pang also reckoned that amendments to the PAO should not be perceived as an obstacle to the proposed Resolution. 12. In the interest of transparency, The Hon. Paul Chan, LegCo Representative of the Accountancy Functional Constituency, urged the Institute to disclose to Institute members the total costs incurred for holding this EGM. - 3 -
13. Having consulted the legal advisor, the Chairman responded to Mr. Edward Chow that none of the 166 petitioners is an incumbent Council member. 14. The Chairman read out the letters received by the Institute from two members, Mr. Lee Chong Kuang and Mr. Peter Wong Hong Yuen, who requested the Chairman to share their views at the meeting. In Mr. Lee's letter, he expressed that he opted to vote against the proposed Resolution because he did not understand clearly the ultimate intention behind the 166 signatories and whether such "direct vote" method would be abused in the future. He was not certain if there was any "influence by Big Four" over the current President and Vice-Presidents as claimed by the 166 signatories. At last, he requested the Institute as a whole to work cohesively, put more efforts on professional and business development, and to remain independent and apolitical. Mr. Wong apologised in his letter for his absence due to prior travel commitment. He found it encouraging that accountants are speaking up for themselves during the recent Election Committee subsector elections. While there are many different viewpoints and people would support those which suit them better, Mr. Wong commented that there is no one perfect way which could satisfy everyone's interest. Regardless the outcome of the EGM, he strongly urged the Council to have a thorough and multi-stakeholder review of the Institute's governance system to ensure that it is as fair as possible to everyone and does not permit any one sector to override the others. 15. As no other members present wished to speak further on the subject, the Chairman declared that since the proposed Resolution had been adequately discussed, the Resolution would be put to the meeting. He informed the meeting that By-law 18 of the Professional Accountants By-laws provides that voting might be done by a show of hands or by polls. In this connection, the Chairman informed the meeting that he had earlier received a written submission under By-law 18(3)(b) signed by not less than ten certified public accountants present at the meeting, including Mr. Clement Chan; Mr. Dennis Ho Chiu Ping; Mr. Jack S.L. Chow; Ms. Mabel M.B. Chan; Mr. Doug Oxley; Mr. Keith Pogson; Mr. Gary Poon; Prof. Cho Lung Pui Lan, Stella; Mr. Wilson Fung; Ms. Susanna Chiu; Mr. Tsai Wing Chung, Philip; and Mr. Ding Wai Chuen, Raphael, requesting that a poll shall be taken at the meeting. The submission was read by the Chairman and he declared that since the request was a valid one, a poll should be taken on the Resolution which had earlier been duly proposed and seconded. 16. The Chairman also informed the meeting that in accordance with By-law 18(8), a vote might be given either personally or by proxy. 17. The Chairman, in accordance with By-law 18(6), appointed 15 certified public accountants, namely, Mr. Yip Ngai Shing, Jimmy; Mr. She Shing Pang, Paul; Mr. Chan Hiu Fun, Ivan; Mr. Cheng Yu Yu, Oliver; Mr. Fung Wing Sang, Leo; Mr. Lai Hon Wai, Henry; Mr. Lam Kin Hang, Kenneth; Mr. Lau Chak Keung, Kenneth; Mr. Law Lai Ting, Adrian; Ms. Lo Shuk Yung, May; Mr. Or Ching Cheung, Ricky; Mr. So Chun Wai, Thomas; Ms. So Hiu Lam, Helen; Ms. Yau Kwong Lai, Becky; and Ms. Yip Tsz Ying, Loretta from Mazars CPA Limited, the Institute's auditors, who were all present at the meeting, as the scrutineers in their personal capacity. - 4 -
18. Voting took place and the voting papers were collected and duly counted by the scrutineers. 19. Upon completion of the counting of the votes, the Chairman invited Mr. Jimmy Yip, on behalf of the scrutineers, to read out the report. 20. Mr. Yip reported that a total of 2,218 votes were cast and the results of the poll were as follows: For the Resolution : 964 Against the Resolution : 1,250 Abstained : 4 Void : 0 21. The Chairman declared that the Resolution was defeated by a majority of members voting in person or by proxy at the meeting. 22. There being no other business, the Chairman thanked members for their attendance and declared the meeting closed at 8:50 p.m.. KEITH POGSON CHAIRMAN 10 January 2012-5 -