FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a - 16 or 15d - 16 of
the Securities Exchange Act of 1934
For the
month of March
HSBC Holdings plc
42nd
Floor, 8 Canada Square, London E14 5HQ, England
(Indicate
by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F).
Form
20-F X Form 40-F
(Indicate
by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information
to the Commission pursuant to Rule 12g3-2(b) under the Securities
Exchange Act of 1934).
Yes
No X
(If
"Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-
).
The following regulated information, disseminated pursuant to
DTR6.3.5, comprises the Notice of Annual General Meeting for 2021
which was sent to shareholders of HSBC Holdings plc on 24 March
2021. A copy of the Notice of Annual General Meeting is available
at www.hsbc.com/agm.
HSBC Holdings plc
Notice of Annual General Meeting to be held at 11.00am London time
(6.00pm Hong Kong time) on Friday, 28 May 2021
At the time of preparing this document, Covid-19 restrictions
remain in place which prevent shareholders attending the Annual
General Meeting ("AGM") in person. We must continue to follow UK
Government guidance and prioritise the health and safety of our
shareholders, our employees and the wider communities in which we
operate. Therefore, at this time we regret that shareholders will
not be permitted to attend the physical location of the AGM in
person.
Facilities will be made available to allow shareholders to attend,
participate and vote electronically at the AGM and to ask questions
in real time should they wish to do so. Further information
on how to join the meeting electronically can be found on pages 29,
30 and 47.
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE
ATTENTION.
If you are in any doubt as to any aspect of the proposals referred
to in this document or as to the action you should take, you should
consult a stockbroker, solicitor, accountant or other appropriate
independent professional adviser.
If you have sold or transferred all your shares in HSBC Holdings
plc (the "Company" or "HSBC" and together with its subsidiary
undertakings, the "Group") you should at once forward this document
and all accompanying documents to the stockbroker, bank or other
agent through whom the sale or transfer was effected for
transmission to the purchaser or transferee.
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of
Hong Kong Limited take no responsibility for the contents of this
document, make no representation as to its accuracy or completeness
and expressly disclaim any liability whatsoever for any loss
howsoever arising from or in reliance upon the whole or any part of
the contents of this document. The ordinary shares of the Company
trade under stock code 5 on The Stock Exchange of Hong Kong
Limited.
A Chinese translation of this Notice of Annual General Meeting is
available at www.hsbc.com. Alternatively, the Chinese translation
of this and future documents may be obtained by contacting the
Company's registrar (see page 31).
Contents
1. Chairman's letter...........................................................................
1
2. Notice of the 2021 Annual General
Meeting..................................4
3. Explanatory
notes...........................................................................10
4. Information about the 2021 Annual General
Meeting....................24
5. Electronic attendance at the 2021 Annual General
Meeting..........29
6. General information........................................................................31
7. Appendices......................................................................................32
24 March 2021
Dear Shareholder
I am pleased to invite you to the HSBC Holdings plc 2021 Annual
General Meeting ("AGM") which will be held on Friday, 28 May 2021
at 11.00am London time (6.00pm Hong Kong time) at 8 Canada Square,
London E14 5HQ.
At the time of preparing this document, Covid-19 restrictions
remain in place which would prevent shareholders attending the AGM
in person. The health and safety of our shareholders, our employees
and the wider communities in which we operate remains our primary
concern. Therefore, as it stands we regret that shareholders will
not be permitted to attend the physical location of the AGM in
person. Only the minimum number of persons required to form a
quorum and to conduct the business of the meeting will attend the
AGM in person.
In order to facilitate your participation in the AGM, we are
enabling shareholders to participate electronically. Shareholders
will be able to attend, vote and raise questions electronically
using the platform provided by following the instructions set out
on pages 29, 30 and 47 . A telephone line will also be provided as
an additional means for shareholders to ask questions at the
meeting. This can be accessed by following the instructions set out
on page 30.
We will continue to monitor the situation as we approach the AGM.
The UK Government's roadmap for easing lockdown restrictions in
England published on 22 February 2021 envisages the potential for
indoor events of up to 1,000 people or half a venue's capacity (if
lower) to take place no earlier than 17 May 2021. However, this is
subject to a number of contingencies and there can be no guarantee
that this will happen. If restrictions have eased in sufficient
time and circumstances enable it, we will seek to change the venue
to permit shareholders to attend the meeting in person if they
wish. Any changes will be made in line with the UK Government's
guidance and with health and safety as a priority. We expect that
there will continue to be some social distancing restrictions in
place on the date of the AGM that will continue to have a
significant impact on our arrangements, including the number of
permitted attendees in person and how the AGM is conducted. We
would therefore still recommend that shareholders do not attend in
person and instead participate in the AGM electronically. You
should continue to monitor the Company's website at
www.hsbc.com/agm as well as our stock exchange announcements for
any updates.
Please read the enclosed Notice of AGM which explains the business
to be considered at the meeting. In addition to the standard items
of business, I would specifically like to highlight the following
items:
Directors
There have been a number of changes to the membership of the Board
since last year's AGM.
Three new independent non-executive Directors have joined the
Board:
●
James
Forese joined the Board on 1 May 2020, bringing a wealth of
experience across finance and corporate strategy, together with his
extensive knowledge of banking and financial services.
●
Steven
Guggenheimer joined the Board on 1 May 2020. His experience of more
than 25 years in technology, particularly in relation to digital
transformation, artificial intelligence and Cloud computing,
supports our strategic transformation.
●
Eileen
Murray joined the Board on 1 July 2020. She is an accomplished
executive with over 40 years of experience in banking and finance,
and has extensive knowledge of financial technologies and corporate
strategy, bringing an invaluable perspective to the
Board.
In line with best practice and as required by the Articles of
Association, James, Steven and Eileen will stand for election for
the first time at this year's AGM. All other continuing Directors
will stand for re-election. Biographical details of those Directors
standing for election and re-election can be found on pages 14 to
19.
Alongside our 2020 Annual Results and business update in February
2021, we announced that Laura Cha would not stand for re-election
at the 2021 AGM and would retire from the Board at the conclusion
of this year's AGM. In addition, earlier this month we also
announced that both Henri de Castries and Heidi Miller will not
stand for re-election at the AGM. Laura, Henri and Heidi have made
valuable contributions to both the Board and the Committees on
which they have served during their tenure. We wish them well with
their future endeavours.
Heidi's retirement from the Board following the AGM will mean that
she also steps down from her role as Chair of our US subsidiary,
HSBC North America Holdings Inc. ("HNAH"). We appointed James
Forese to the Board of HNAH as an independent non-executive
Director at the beginning of the year and he will now replace Heidi
as the Chair of the HNAH Board. Given his extensive executive
experience with Citigroup, we have confidence in the partnership
that James and Michael Roberts, our CEO for the US, will form in
leading HNAH through the next phase of the Group's US
strategy.
The Board considers that each of the Directors standing for
election or re-election continues to make a strong contribution to
the Board and its Committees through their skills and experience.
Further information can be found in their biographies on pages 14
to 19 of this document. All of the Directors were subject to a
performance review and I held individual discussions with each of
them during the year. Further details can be found in the 2020
Annual Report & Accounts.
At the conclusion of this year's AGM, subject to the election and
re-election of the Directors as recommended, your Board will
comprise a non-executive Group Chairman, two executive Directors
and eight independent non-executive Directors.
On 19 February 2021, we announced that Dame Carolyn Fairbairn will
be appointed as an independent non-executive Director of the
Company with effect from 1 September 2021. She will also be
appointed as a member of the Group Remuneration Committee, the
Group Risk Committee and the Nomination & Corporate Governance
Committee.
On 11 March 2021, we announced that Rachel Duan will be appointed
as an independent non-executive Director of the Company with effect
from 1 September 2021. She will join the Group Remuneration
Committee and the Nomination & Corporate Governance
Committee.
Dame Carolyn's and Rachel's appointments as Directors of the
Company will both be subject to election by shareholders at the
2022 AGM and annual re-election thereafter.
Climate change resolution
We are proposing a climate change resolution which focuses on
actions we are proposing to take in connection with our ambition to
align our provision of finance with a net zero outcome by 2050,
consistent with the goals of the Paris Agreement on climate change,
as we previously announced in October 2020. This resolution is
incorporated as Resolution 15 in the Notice of AGM and, together
with the supporting statement in Appendix 3, has been discussed and
agreed with ShareAction and a group of HSBC
shareholders.
ShareAction
together with a number of shareholders ("co-filers") had originally
proposed an alternative resolution on climate change to be put to
the AGM (the "Requisitioned Climate Resolution"). After
constructive and extensive dialogue and engagement with
ShareAction, certain of the co-filers and other shareholders, we
are pleased that ShareAction, on behalf of the co-filers of the
Requisitioned Climate Resolution, has withdrawn the request to put
the Requisitioned Climate Resolution to the AGM. ShareAction and
certain of the co-filers of the Requisitioned Climate Resolution
recommend that shareholders vote in favour of Resolution 15. Your
Board recommends you vote FOR this resolution for the reasons
set out in Appendix 3 on pages 36 to 38.
Shareholder requisitioned resolution - Midland Clawback
Campaign
We have
received notice of a shareholder requisitioned resolution pursuant
to Section 338 of the UK Companies Act 2006 from the Midland
Clawback Campaign. This resolution is incorporated as Resolution 16
in the Notice of AGM. The resolution and supporting statement
(which is set out in Appendix 4 on pages 39 to 40) should be read
together.
Your
Board recommends that you vote AGAINST this resolution for the
reasons set out in Appendix 5 on pages 41 to 44.
Your Board considers that the proposals set out in Resolutions 1 to
15 of this Notice are in the best interests of the Company and its
shareholders and recommends that you vote in favour of these
resolutions. Your Board recommends that you vote against Resolution
16 for the reasons set out in Appendix 5 on pages 41 to 44. The
Directors intend to vote in line with these recommendations in
respect of their own beneficial holdings.
A form of proxy is enclosed or can be accessed at
www.hsbc.com/proxy. I encourage you to vote on the Resolutions in
advance of the AGM by completing and submitting a form of proxy
appointing the Chairman of the AGM as your
proxy. This
is to ensure that your vote is counted even if you plan to attend
electronically. Appointing a proxy will not prevent you from
attending the AGM electronically (or physically if permitted by the
day of the AGM) and voting on the day.
Together with the Board, I would like to thank you - our valued
shareholders - for your continued support through an extraordinary
period and I very much look forward to being able to welcome you to
the AGM.
Yours sincerely
Mark E Tucker
Group Chairman
HSBC Holdings plc
Incorporated in England with limited liability. Registered in
England: number 617987
Registered Office and Group Head Office:
8 Canada Square, London E14 5HQ, United Kingdom
HSBC Holdings plc
Notice of the 2021 Annual General Meeting
Notice is hereby given that the 2021 Annual General Meeting of HSBC
Holdings plc will be held at 8 Canada Square, London E14 5HQ on
Friday, 28 May 2021 at 11.00am London time (6.00pm Hong Kong time)
in accordance with the information set out on pages 24 to 30 and in
Appendix 7 on page 47.
Resolutions numbered 1 to 7, 10 and 12 will be proposed as ordinary
resolutions and those numbered 8, 9, 11 and 13 to 16 will be
proposed as special resolutions. For ordinary resolutions to be
passed, more than half of the votes cast must be in favour of the
resolution, while in the case of special resolutions to be passed,
at least three-quarters of the votes must be cast in
favour.
1. Annual
Report & Accounts*
To receive the Annual Accounts and Reports of the Directors and of
the Auditor for the year ended 31 December 2020.
2. Directors'
Remuneration Report*
To approve the Directors' Remuneration Report set out on pages 229
to 255 of the Annual Report & Accounts for the year ended 31
December 2020, excluding the summary of the Directors' Remuneration
Policy on pages 235 to 238.
3. Election
and re-election of Directors*
To elect by separate resolutions each of:
(a)
|
James
Forese;
|
(c)
|
Eileen
Murray;
|
(b)
|
Steven
Guggenheimer;
|
|
|
To re-elect by separate resolutions each of:
(d)
|
Irene
Lee;
|
(h)
|
Ewen
Stevenson;
|
(e)
|
Dr
José Antonio Meade Kuribreña;
|
(i)
|
Jackson
Tai;
|
(f)
|
David
Nish;
|
(j)
|
Mark E
Tucker; and
|
(g)
|
Noel
Quinn;
|
(k)
|
Pauline
van der Meer Mohr.
|
4. Re-appointment of Auditor*
To re-appoint PricewaterhouseCoopers LLP as Auditor of the Company,
to hold office from the conclusion of this meeting until the
conclusion of the next general meeting of the Company at which
accounts are laid.
5. Remuneration of Auditor*
To authorise the Group Audit Committee to determine the
remuneration of the Auditor.
6. Political
Donations*
THAT in accordance with sections 366 and 367 of the UK Companies
Act 2006 (the "Act") the Company, and any company which is a
subsidiary of the Company at any time during the period for which
this resolution has effect, be authorised to:
(a)
make political donations to political parties and/or independent
election candidates, not exceeding £200,000 in
total;
(b)
make political donations to political organisations other than
political parties, not exceeding £200,000 in total;
and
(c)
incur political expenditure, not exceeding £200,000 in
total,
in each case during the period starting on the date of the passing
of this Resolution 6 and expiring at the conclusion of the Annual
General Meeting of the Company to be held in 2022 or at the close
of business on 30 June 2022, whichever is earlier, provided the
aggregate amount of any such donations and expenditure shall not
exceed £200,000 during the period for which this
Resolution 6 has effect. For the purposes of this resolution, the
terms 'political donations', 'political parties', 'independent
election candidates', 'political organisations' and 'political
expenditure' shall have the meanings given to them by sections 363
to 365 of the Act.
7. Authority to allot
shares*
THAT the Directors be generally and unconditionally authorised
pursuant to and for the purposes of section 551 of the UK Companies
Act 2006 (the "Act") to exercise all the powers of the Company to
allot shares in the Company and to grant rights to subscribe for,
or to convert any security into, shares in the
Company:
(a)
up to an aggregate nominal amount of US$2,042,279,925 (such amount
to be restricted to the extent that any allotments or grants are
made under paragraphs (b) or (c) of this resolution so that in
total no more than US$3,403,799,875 can be allotted or granted
under paragraphs (a) and (b) of this resolution and no more than
US$6,807,599,750 can be allotted under paragraphs (a), (b) and (c)
of this resolution); and
(b)
up to an aggregate nominal amount of US$3,403,799,875 (such amount
to be restricted to the extent that any allotments or grants are
made under paragraphs (a) or (c) of this resolution so that in
total no more than US$3,403,799,875 can be allotted or granted
under paragraphs (a) and (b) of this resolution and no more than
US$6,807,599,750 can be allotted under paragraphs (a), (b) and (c)
of this resolution) in connection with an offer or invitation
to:
(i)
holders of ordinary shares in proportion (as nearly as may be
practicable) to the respective number of ordinary shares held by
them; and
(ii)
holders of other securities, bonds, debentures or warrants which,
in accordance with the rights attaching thereto, are entitled to
participate in such an offer or invitation or as the Directors
consider necessary,
but
in each case subject to such exclusions or other arrangements as
the Directors may deem necessary or expedient in relation to record
dates, fractional entitlements, treasury shares or securities
represented by depositary receipts or having regard to any
restrictions, obligations, practical or legal problems under the
laws of or the requirements of any regulatory body or stock
exchange in any territory or otherwise howsoever; and
(c)
comprising equity securities (as defined in section 560 of the Act)
up to an aggregate nominal amount of US$6,807,599,750 (such amount
to be restricted to the extent that any allotments or grants are
made under paragraphs (a) or (b) of this resolution so that in
total no more than US$6,807,599,750 can be allotted under
paragraphs (a), (b) and (c) of this resolution) in connection with
a rights issue to:
(i)
holders of ordinary shares in proportion (as nearly as may be
practicable) to the respective number of ordinary shares held by
them; and
(ii)
holders of other securities, bonds, debentures or warrants which,
in accordance with the rights attaching thereto, are entitled to
participate in such an issue or as the Directors consider
necessary,
but
in each case subject to such exclusions or other arrangements as
the Directors may deem necessary or expedient in relation to record
dates, fractional entitlements, treasury shares or securities
represented by depositary receipts or having regard to any
restrictions, obligations, practical or legal problems under the
laws of or the requirements of any regulatory body or stock
exchange in any territory or otherwise howsoever; and
(d)
up to an aggregate nominal amount of £150,000 (in the form of
15,000,000 non-cumulative preference shares of £0.01 each),
€150,000 (in the form of 15,000,000 non-cumulative preference
shares of €0.01 each) and US$150,000 (in the form of
15,000,000 non-cumulative preference shares of US$0.01
each),
provided that, unless previously renewed, varied or revoked by the
Company in general meeting, such authority shall expire at the
conclusion of the Annual General Meeting of the Company to be held
in 2022 or at the close of business on 30 June 2022, whichever is
the earlier, save that this authority shall allow the Company
before the expiry of this authority to make offers, and enter into
agreements, which would, or might, require shares to be allotted or
rights to subscribe for, or to convert any security into, shares to
be granted after the authority expires and the Directors may allot
shares or grant rights to subscribe for, or to convert any security
into, shares (as the case may be) in pursuance of such offers or
agreements as if the authority conferred hereby had not
expired.
8. Disapplication of pre-emption
rights#
THAT if Resolution 7 set out in the Notice convening this meeting
is passed, the Directors be authorised to allot equity securities
(as defined in section 560 of the UK Companies Act 2006 (the
"Act")) for cash under the authority given by Resolution 7 and/or
to sell shares held by the Company as treasury shares for cash as
if section 561(1) of the Act did not apply to any such allotment or
sale, such authority to be limited:
(a)
to the allotment of equity securities and/or sale of treasury
shares for cash in connection with any rights issue, or other offer
or invitation (but in the case of the authority granted under
paragraph (c) of Resolution 7, by way of a rights issue only)
to:
(i)
holders of ordinary shares in proportion (as nearly as may be
practicable) to the respective number of ordinary shares held by
them; and
(ii)
holders of other securities, bonds, debentures or warrants which,
in accordance with the rights attaching thereto, are entitled to
participate in such an issue, offer or invitation or as the
Directors consider necessary,
but
in each case subject to such exclusions or other arrangements as
the Directors may deem necessary or expedient in relation to record
dates, fractional entitlements, treasury shares or securities
represented by depositary receipts or having regard to any
restrictions, obligations, practical or legal problems under the
laws of or the requirements of any regulatory body or stock
exchange in any territory or otherwise howsoever; and
(b)
to the allotment of equity securities and/or sale of treasury
shares (otherwise than under paragraph (a) above) up to an
aggregate nominal amount of US$510,569,981,
provided that, unless previously renewed, varied or revoked by the
Company in general meeting, such authority shall expire at the
conclusion of the Annual General Meeting of the Company to be held
in 2022 or at the close of business on 30 June 2022, whichever is
the earlier, save that this authority shall allow the Company
before expiry of this authority to make offers, and enter into
agreements, which would or might require equity securities to be
allotted (or treasury shares to be sold) after the authority
expires and the Directors may allot equity securities (or sell
treasury shares) under any such offer or agreement as if the
authority had not expired.
9. Further disapplication of
pre-emption rights for acquisitions#
THAT if Resolution 7 set out in the Notice convening this meeting
is passed, the Directors be authorised (in addition to any
authority granted under Resolution 8 set out in the Notice
convening this meeting) to allot equity securities (as defined in
section 560 of the UK Companies Act 2006 (the "Act")) for cash
under the authority given by Resolution 7 and/or to sell shares
held by the Company as treasury shares for cash as if section
561(1) of the Act did not apply to any such allotment or sale, such
authority to be:
(a)
limited to the allotment of equity securities and/or sale of
treasury shares up to a nominal amount of US$510,569,981;
and
(b)
used only for the purposes of financing (or refinancing, if the
authority is to be used within six months after the original
transaction) a transaction which the Directors determine to be an
acquisition or other capital investment of a kind contemplated by
the Statement of Principles on Disapplying Pre-Emption Rights most
recently published by the Pre-Emption Group prior to the date of
the Notice convening this meeting,
provided that, unless previously renewed, varied or revoked by the
Company in general meeting, such authority shall expire at the
conclusion of the Annual General Meeting of the Company to be held
in 2022 or at the close of business on 30 June 2022, whichever is
the earlier, save that this authority shall allow the Company
before expiry of this authority to make offers, and enter into
agreements, which would or might require equity securities to be
allotted (or treasury shares to be sold) after the authority
expires and the Directors may allot equity securities (or sell
treasury shares) under any such offer or agreement as if the
authority had not expired.
10. Addition of any repurchased shares to general authority
to allot shares*
THAT the authority granted to the Directors to allot shares or
grant rights to subscribe for, or convert any security into, shares
in the Company pursuant to paragraph (a) of Resolution 7 set out in
the Notice convening this meeting be extended by the addition of
such number of ordinary shares of US$0.50 each representing the
nominal amount of the Company's share capital repurchased by the
Company under the authority granted pursuant to Resolution 11 set
out in the Notice convening this meeting, to the extent that such
extension would not result in any increase in the authority to
allot shares or grant rights to subscribe for, or convert
securities into, shares pursuant to paragraphs (b) and (c) of
Resolution 7 set out in the Notice convening this
meeting.
11. Purchases of Ordinary Shares
by the Company#
THAT the Company be and is hereby generally and unconditionally
authorised for the purposes of section 701 of the UK Companies Act
2006 (the "Act") to make market purchases (within the meaning of
section 693 of the Act) of Ordinary Shares of US$0.50 each
("Ordinary Shares") and on such terms and in such manner as the
Directors shall from time to time determine provided
that:
(a)
the maximum aggregate number of Ordinary Shares hereby authorised
to be purchased is 2,042,279,925 Ordinary Shares;
(b)
the minimum price (exclusive of expenses) which may be paid for
each Ordinary Share is US$0.50 or the equivalent in the relevant
currency in which the purchase is effected calculated by reference
to the spot rate of exchange for the purchase of United States
dollars with such other currency as quoted by HSBC Bank plc in the
London Foreign Exchange Market at or about 11.00am London time on
the business day (being a day on which banks are ordinarily open
for the transaction of normal banking business in London) prior to
the date on which the Ordinary Share is contracted to be purchased,
in each case such rate to be the rate as conclusively certified by
an officer of HSBC Bank plc;
(c)
the maximum price (exclusive of expenses) which may be paid for
each Ordinary Share is the lower of (i) 105 per cent of the average
of the middle market quotations for the Ordinary Shares (as derived
from the Daily Official List of the London Stock Exchange plc) for
the five dealing days immediately preceding the day on which the
Ordinary Share is contracted to be purchased, or (ii) 105 per cent
of the average of the closing prices of the Ordinary Shares on The
Stock Exchange of Hong Kong Limited for the five dealing days
immediately preceding the day on which the Ordinary Share is
contracted to be purchased, in each case converted (where relevant)
into the relevant currency in which the purchase is effected
calculated by reference to the spot rate of exchange for the
purchase of such currency with the currency in which the quotation
and/or price is given as quoted by HSBC Bank plc in the London
Foreign Exchange Market at or about 11.00am London time on the
business day prior to the date on which the Ordinary Share is
contracted to be purchased, in each case such rate to be the rate
as conclusively certified by an officer of HSBC Bank
plc;
(d)
unless previously renewed, revoked or varied by the Company in
general meeting, this authority shall expire at the conclusion of
the Annual General Meeting of the Company to be held in 2022 or at
the close of business on 30 June 2022, whichever is the earlier;
and
(e)
the Company may prior to the expiry of this authority make a
contract or contracts to purchase Ordinary Shares under this
authority which will or may be completed or executed wholly or
partly after such expiry and may make a purchase of Ordinary Shares
pursuant to any such contract or contracts as if the authority
conferred hereby had not expired.
12. Additional authority to allot equity securities in
relation to the issue of Contingent Convertible
Securities*
THAT in addition to any authority granted pursuant to Resolution 7
set out in the Notice convening this meeting, the Directors be
generally and unconditionally authorised under and for the purposes
of section 551 of the UK Companies Act 2006 (the "Act") to exercise
all the powers of the Company to allot shares in the Company and to
grant rights to subscribe for, or to convert any security into,
shares in the Company up to an aggregate nominal amount of
US$2,042,279,925 in relation to any issue by the Company or any
member of the Group of Contingent Convertible Securities ("CCSs")
that automatically convert into or are exchanged for ordinary
shares in the Company in prescribed circumstances where the
Directors consider such an issue of CCSs would be desirable in
connection with, or for the purposes of, complying with or
maintaining compliance with regulatory capital requirements or
targets applicable to the Group from time to time and otherwise on
terms as may be determined by the Directors, provided that, unless
previously renewed, varied or revoked by the Company in general
meeting, such authority shall expire at the conclusion of the
Annual General Meeting of the Company to be held in 2022 or at the
close of business on 30 June 2022, whichever is the earlier, save
that this authority shall allow the Company before the expiry of
this authority to make offers, and enter into agreements, which
would or might require shares to be allotted or rights to subscribe
for, or to convert any security into, shares to be granted after
the authority expires and the Directors may allot shares or grant
rights to subscribe for, or to convert any security into, shares
(as the case may be) in pursuance of such offers or agreements as
if the authority conferred hereby had not expired.
13. Limited
disapplication of pre-emption rights in relation to the issue of
Contingent Convertible Securities#
THAT if Resolution 12 set out in the Notice convening this meeting
is passed, the Directors be authorised (in addition to any
authority granted under Resolutions 8 and 9 set out in the Notice
convening this meeting) to allot equity securities (as defined in
section 560 of the UK Companies Act 2006 (the "Act")) for cash
under the authority given by Resolution 12 and/or to sell shares
held by the Company as treasury shares for cash as if section
561(1) of the Act did not apply to any such allotment or sale,
provided that, unless previously renewed, varied or revoked by the
Company in general meeting, such authority shall expire at the
conclusion of the Annual General Meeting of the Company to be held
in 2022 or at the close of business on 30 June 2022, whichever is
the earlier, save that this authority shall allow the Company
before expiry of this authority to make offers, and enter into
agreements, which would or might require equity securities to be
allotted (or treasury shares to be sold) after the authority
expires and the Directors may allot equity securities (or sell
treasury shares) under any such offer or agreement as if the
authority had not expired.
14. Notice of general
meetings#
THAT the Directors be authorised to call general meetings (other
than annual general meetings) on a minimum of 14 clear days'
notice.
15. Climate change
resolution#
THAT,
to promote the long term success of the Company, given the risks
and opportunities associated with climate change, the Company
should:
(a) Set,
disclose and implement a strategy with short and medium term
targets to align its provision of finance1 across
all sectors, starting with Oil & Gas and Power & Utilities,
with the goals and timelines of the Paris
Agreement2.
(b) Publish
and implement a policy to phase out the
financing1 of
coal-fired power and thermal coal mining by 2030 in markets in the
European Union / Organisation for Economic Cooperation and
Development, and by 2040 in other
markets.
(c) Report
on progress against that strategy and policy on an annual basis,
starting with the 2021 Annual Report and Accounts, including a
summary of the methodology, scenarios and core assumptions used.
This reporting will omit commercially confidential or sensitive
information and will be at reasonable cost.
Footnotes:
1. For
the purposes of this resolution, "finance" and "financing" means
providing project finance or direct lending to, or underwriting
capital markets transactions for, corporate clients of our Global
Banking and Commercial Banking businesses.
2. As
set out by Article 2.1(a) and Article 4.1 of the Paris
Agreement: https://unfccc.int/files/essential_background/convention/application/pdf/english_paris_agreement.pdf
16. Shareholder requisitioned
resolution - Midland Clawback Campaign#
HSBC have a history of paying compensation when it is considered,
in retrospect, to be the right thing to do. As an example,
recently, HSBC have voluntarily refunded charges, previously taken
by their Collections and Recoveries Team. These charges would have
been taken in line with the correct policies and procedures at that
time; however, today, on reflection, they would now appear to be
unnecessarily harsh.
This resolution calls for the directors to take similar action, by
meeting with the Midland Clawback Campaign committee, to find an
equitable solution to the unfair, discriminatory but legal practice
of enforcing Clawback on members of the post 1974 Midland Section
Defined Benefit Scheme.
The Board unanimously recommends that shareholders VOTE AGAINST
Resolution 16.
By order of the Board
Aileen Taylor
24 March 2021
Group Company Secretary and Chief Governance Officer
HSBC Holdings plc
Incorporated in England with
limited liability. Registered in England: number
617987 Registered Office
and Group Head Office:
8 Canada Square, London E14 5HQ, United Kingdom
* Ordinary resolution
# Special
resolution
Explanatory notes
Information about the business to be considered at the 2021 Annual
General Meeting ("AGM") is set out below.
These explanatory notes should be read in conjunction with the 2020
Annual Report & Accounts in respect of the year ended 31
December 2020. This Notice of AGM, the 2020 Annual Report &
Accounts and the 2020 Strategic Report are available at
www.hsbc.com.
For the purpose of this Notice, the issued share capital (excluding
treasury shares) of the Company on 10 March 2021, being the latest
practicable date prior to the printing of this document, was
20,422,799,252 ordinary shares of US$0.50 each and carrying one
vote each with total voting rights of 20,422,799,252.
1. Annual Report &
Accounts
The purpose of this item is for shareholders to receive and
consider the Annual Accounts and the Reports of the Directors and
of the Auditor for the year ended 31 December 2020.
2. Directors' Remuneration
Report
The purpose of this item is to seek shareholder approval of the
Directors' Remuneration Report for the year ended 31 December 2020
(other than the summary of the Directors' Remuneration Policy on
pages 235 to 238 of the 2020 Annual Report & Accounts). The
Directors' Remuneration Report is on pages 229 to 255 of the 2020
Annual Report & Accounts. The actual remuneration paid to
Directors in 2020 was made within the boundaries of the Directors'
Remuneration Policy which was approved by shareholders at the 2019
Annual General Meeting for a period of up to three years and is,
therefore, not required to be put to shareholders for approval at
this AGM. It will be put to shareholders for approval again no
later than the 2022 Annual General Meeting. The vote on the
Directors' Remuneration Report is advisory in nature and cannot
impact what is paid under the shareholder-approved Directors'
Remuneration Policy.
3. Election and re-election of
Directors
Appointment
Appointments to the Board are made on merit and candidates are
considered against objective criteria determined with reference to
the Board's skills matrix, having due regard to the benefits of
diversity in line with the Board's Diversity Policy. The Nomination
& Corporate Governance Committee (the "Committee") leads the
Board appointment process, agrees the criteria for any appointments
and engages independent external search consultants, as required.
At the conclusion of this process, the Committee nominates
potential candidates for appointment to the Board. In the exercise
of its responsibilities, the Committee regularly reviews the
Board's structure, size and composition, including skills,
knowledge, experience, independence and diversity.
Diversity
The biography of each Director located on pages 14 to 19 can be
used to assess how each individual contributes to the diversity of
the Board.
Independence
The Board has concluded that all of the non-executive Directors
standing for election or re-election at the AGM are independent in
character and judgement.
When considering independence, the Board calculates the length of
service of a non-executive Director by reference to the date of his
or her election by shareholders following his or her appointment.
The Board has determined that there are no relationships or
circumstances which are likely to affect the judgement of any of
the non-executive Directors. Any relationships or circumstances
which could appear to do so are not considered to be material. Each
of the Directors standing for election or re-election has confirmed
that they have no material relationship with another Director, a
member of senior management or any substantial or controlling
shareholder of the Company.
Election of new Directors
The following Directors were each appointed as a non-executive
Director of the Company during the year and will offer themselves
for election as non-executive Directors at this AGM:
- James Forese (with effect from 1 May 2020);
- Steven Guggenheimer (with effect from 1 May 2020);
and
- Eileen Murray (with effect from 1 July 2020).
Time commitment
The Board, both prior to a Director's appointment and when
nominating a Director for election or re-election, enquires and
obtains assurance, that each Director is, or will be, capable of
contributing the time expected of them and time that may be
unanticipated should additional demands be placed on them in
relation to HSBC or in relation to their other
commitments.
The Board has carefully considered the other commitments held by
the Directors and has applied the same standard of enquiry for each
of them. Our focus is to determine the ability of each Director to
commit sufficient time to fulfil their individual obligations,
rather than a strict adherence to a numeric count of directorships.
Where Directors hold other roles either outside of or elsewhere
within the Group, or prior to accepting any additional roles,
particular attention is paid to ensure that they are able to commit
sufficient time to the Company.
Tenure
Non-executive Directors are appointed for an initial three-year
term and, subject to re-election by shareholders at each AGM, are
typically expected to serve two three-year terms. The Board may
invite a Director to serve additional periods. Any term beyond six
years is subject to a particularly rigorous review by the
Committee, with any appointment beyond six years to be for one-year
terms only.
Arising from its deliberations, the Board notes the following in
relation to those Directors seeking re-election:
Irene Lee
Irene Lee is a highly valued and experienced Director with specific
geographic and commercial experience which is of particular
relevance to the delivery of the Group's strategy. The Board
attaches great importance to the contribution that Irene makes to
HSBC.
Irene is the executive Chair of Hysan Development Company Limited
and has delegated day to day operational responsibility to her
executive team. Her non-executive role with HSBC, including its
subsidiaries, The Hongkong and Shanghai Banking Corporation Limited
and Hang Seng Bank Limited comprise her most significant
non-executive commitments.
It was announced on 4 January 2021, that from the conclusion of the
Hang Seng Bank Limited Annual General Meeting in May 2021, Irene
would assume the role of non-executive Chair of the Board of Hang
Seng Bank Limited. In order to ensure that Irene has sufficient
capacity to fulfil her roles to HSBC and its subsidiaries, Irene
will step down as Chair of the Hang Seng Bank Limited Risk
Committee and will also step down from her role on the HSBC Group
Remuneration Committee following the AGM.
The Board is satisfied that Irene Lee has sufficient capacity to
discharge her duties and remains supportive of Irene Lee and her
continued commitment to HSBC.
The biographies on pages 14 to 19 set out the skills and experience
which underpin the contribution each Director brings to the Board
for the long term sustainable success of the Company. Based upon
the review undertaken, the Board has satisfied itself that each of
the Directors is fully able to discharge his or her duties to the
Company and that they each have sufficient capacity to meet their
commitments to the Company. The Board has therefore concluded that
all of the Directors should offer themselves for election or
re-election in accordance with the Group's regular practice. Laura
Cha, Henri de Castries and Heidi Miller are retiring at the
conclusion of the AGM and are not offering themselves for
re-election.
Non-executive Directors' fees
Following shareholder approval of the Directors' Remuneration
Policy at the Annual General Meeting held on 12 April 2019, each
non-executive Director receives a fee of £127,000 per annum.
The senior independent non-executive Director receives a fee of
£200,000 per annum in addition to his non-executive Director
fee and the fees payable for the Chairmanship or membership of
Board Committees.
The non-executive Group Chairman receives a fee of £1.5
million per annum. As announced at the commencement of the Covid-19
outbreak, the Group Chairman donated 100 per cent of his 2020 fee
to charities supporting healthcare workers and the vulnerable in
the UK and Hong Kong.
The fees paid to non-executive Directors who are standing for
election or re-election as members of Board Committees are set out
below (these and Board fees are pro-rated for part year service
where relevant):
Committee*
|
Fees
(per annum)
|
Committee
members standing for
|
|
|
|
|
election
or re-election**
|
|
|
|
|
|
|
|
Chairman
|
Member
|
|
|
|
|
|
|
|
Group
Audit Committee
|
£75,000
|
£40,000
|
David
Nish (Chairman), James Forese, Eileen Murray, Jackson Tai and
Pauline van der Meer Mohr
|
|
|
|
|
|
|
|
|
|
|
|
|
Group
Risk Committee
|
£150,000
|
£40,000
|
Jackson Tai (Chairman),
Dr José Antonio
Meade Kuribreña,
David Nish, Steven Guggenheimer, Eileen Murray and Pauline van der
Meer Mohr
|
|
|
|
|
|
Group
Remuneration Committee
|
£75,000
|
£40,000
|
Pauline
van der Meer Mohr (Chairman),
|
|
James
Forese, Irene Lee
|
|
|
|
|
|
|
|
|
|
|
Nomination &
Corporate Governance Committee
|
N/A***
|
£33,000
|
|
|
Mark E
Tucker (Chairman), Pauline van der Meer Mohr, James Forese, Steven
Guggenheimer, Irene Lee, Dr José Antonio Meade
Kuribreña, Eileen Murray, David Nish and Jackson
Tai
|
|
|
|
|
|
|
Technology
Governance Working Group
|
£60,000
|
N/A
|
Eileen
Murray (co-Chair), Steven Guggenheimer (co-Chair) and Jackson
Tai
|
|
|
|
|
|
|
|
|
|
|
|
*
For further details of the roles and accountabilities of each of
these Board Committees, see pages 213 to 255 of the 2020 Annual
Report & Accounts.
** The table does not include Committee members retiring and not
standing for re-election at the AGM.
*** The Group Chairman serves as the Chairman of the Nomination
& Corporate Governance Committee and receives no additional fee
in respect of this position.
In light of the increasingly significant role of technology in the
Group's strategy, operations and growth prospects, in January 2021
the Board approved the establishment of a Technology Governance
Working Group for a period of 12 months. The working group has been
tasked with developing recommendations to strengthen the Board's
oversight of technology strategy, governance and emerging risks and
to enhance connectivity with the principal
subsidiaries.
The working group will be chaired jointly by Eileen Murray and
Steven Guggenheimer, given their expertise and experience in this
area. Jackson Tai, the Group Risk Committee Chair, will be a
member, along with other non-executive Directors to be nominated by
each of our US, UK, European and Asian principal subsidiaries. The
total time commitment expected of the co-Chairs will be up to 30
days, reflective of the complexity and profile of the subject
matter. As a result, the Group Remuneration Committee has
determined a fee of £60,000 for each of the co-Chairs. Members
will not receive fees.
Irene Lee, as an independent non-executive Director, the Chairman
of the Remuneration Committee, a member of the Audit Committee
and a member of the Risk Committee of The Hongkong and Shanghai
Banking Corporation Limited, receives fees of HK$990,000,
HK$450,000, HK$340,000 and HK$340,000 respectively per annum. In
2020, Irene Lee received fees of HK$1,295,834 for her role as an
independent non-executive Director, the Chairman of the Risk
Committee, member of the Audit Committee and member of Nomination
Committee of Hang Seng Bank Limited. Following her appointment as
an independent non-executive Chair of Hang Seng Bank Limited, she
will receive fees currently fixed at HK$860,000 per annum. In
addition, she will receive fees currently fixed at HK$630,000
per annum for her roles as the Chair of the Nomination Committee, a
member of the Risk Committee, a member of the Audit Committee and a
member of the Remuneration Committee. These fees were authorised by
shareholders and the Boards of The Hongkong and Shanghai Banking
Corporation Limited and Hang Seng Bank Limited.
James Forese receives a fee of US$285,000 per annum as
non-executive Director of HSBC North America Holdings Inc.
Following his appointment as Chairman of HSBC North America
Holdings Inc., James will receive a fee of US$550,000. These fees
were approved by the shareholder and authorised by the Board of
HSBC North America Holdings Inc.
Non-executive Directors also receive a travel allowance of
£4,000 per annum towards the additional time commitment
required for travel. During periods when the Board is unable to
travel, non-executive Directors will not receive this
allowance.
Non-executive Directors' terms of appointment
Non-executive Directors do not have service agreements, but are
bound by letters of appointment issued for and on behalf of the
Company. Subject to their re-election by shareholders, the terms of
appointment of the non-executive Directors will expire at the
conclusion of the Annual General Meetings held in the following
years: Irene Lee, Pauline van der Meer Mohr and Dr José
Antonio Meade Kuribreña - 2022; David Nish and Jackson Tai -
2023; and Mark E Tucker, James Forese, Steven Guggenheimer and
Eileen Murray - 2024.
Executive Directors' service contracts and
remuneration
The executive Directors have rolling service contracts with a
notice period of 12 months for either party. The dates of the
service contracts are:
Noel
Quinn
18 March 2020
Ewen
Stevenson
1 December 2018
Under the terms of their employment Noel Quinn and Ewen Stevenson
each receive fixed pay consisting of base salary, cash in lieu of
pension and fixed pay allowance and are eligible to receive
discretionary variable pay awards.
From 1 March 2021, their base salaries increased by 1.6 per cent in
line with base salary increase for Group employees to
£1,291,000 and £753,000 per annum respectively. Noel
Quinn and Ewen Stevenson receive cash in lieu of pension allowance
at 10 per cent of base salary. Fixed pay allowances delivered in
shares (net of shares sold to cover any income tax and social
security) will be subject to a retention period. Shares will be
released annually on a pro rata basis over five years starting from
the March immediately following the end of the financial year in
respect of which the shares are granted. The fixed pay allowance
paid to Noel Quinn is £1,700,000 per annum. Ewen Stevenson's
fixed pay allowance increased from £950,000 to £1,085,000
from 1 March 2021 to reflect his expanded responsibilities as
explained in the 2020 Annual Report & Accounts.
Further details of the Directors' emoluments are set out in the
Directors' Remuneration Report contained in the 2020 Annual Report
& Accounts on pages 229 to 255.
The Directors at the date of this document are: Laura Cha†,
Henri de Castries†, James Anthony Forese†, Steven
Guggenheimer†, Irene Lee†, José Antonio Meade
Kuribreña†, Heidi Miller†, Eileen K Murray†,
David Nish†, Noel Quinn, Ewen Stevenson, Jackson Tai†,
Mark Tucker*, and Pauline van der Meer Mohr†.
* Non-executive Group Chairman
† Independent non-executive Director
Biographical details
Brief biographical details of each of the Directors standing for
election and re-election are set out below.
Non-executive Group Chairman
Mark Edward Tucker (63)
Group Chairman
Appointed to the Board: September 2017
Group Chairman since: October 2017
Committee membership: Nomination & Corporate Governance
Committee (Chair).
Skills and experience: With over 30 years' experience in financial
services in Asia and the UK, Mark has a deep understanding of the
industry and the markets in which we operate.
Career: Mark was
previously Group Chief Executive and President of AIA Group Limited
("AIA"). Prior to joining AIA, he held various senior management
roles with Prudential plc, including as Group Chief Executive for
four years. He served on Prudential's Board for 10
years. Mark
previously served as non-executive Director of the Court of The
Bank of England, as an independent non-executive Director of
Goldman Sachs Group and as Group Finance Director of HBOS
plc.
External appointments: Chair
of TheCityUK, non-executive
Chair of Discovery Limited, Member of Build Back Better Council,
Member of the UK Investment Council and Supporting Chair of Chapter
Zero.
Reasons for re-election: Mark
has a wealth of leadership experience within financial services in
Asia and the UK, through his roles with Prudential and AIA. His
deep knowledge of our markets and extensive experience as a leader,
non-executive director and Chairman, in addition to his
geographical and stakeholder insights, position him well to lead
the Board.
Executive Directors
Noel Paul Quinn (59)
Group Chief Executive
Appointed to the Board: August 2019
Group Chief Executive since: March 2020
Skills and experience: Noel has
more than 30 years' banking and financial services experience, both
in the UK and Asia, with over 28 years at HSBC.
Career: Noel was formally
named Group Chief Executive in March 2020, having held the role on
an interim basis since August 2019. He has held various management
roles across HSBC since joining in 1992. He was most recently Chief
Executive Officer of Global Commercial Banking, having been
appointed to the role in December 2015 and as a Group Managing
Director in September 2016. Noel joined Forward Trust Group, a
subsidiary of Midland Bank, in 1987 and joined HSBC in 1992 when
the Group acquired Midland Bank.
External appointments: Chair of the Financial Services Task Force of the
Sustainable Markets Initiative.
Reasons for re-election: Noel's comprehensive banking and financial
services background provide the foundation for his role as Group
Chief Executive. His knowledge and experience as well as his proven
track record with HSBC across leadership and strategic roles based
in the UK and Asia, provides the platform for him to deliver the
Group's strategy.
Ewen James Stevenson (54)
Group Chief Financial Officer
Appointed to the Board: January 2019
Skills and experience: Ewen has over 25 years' experience in the
banking industry, both as an adviser to major banks and as an
executive of large financial institutions. In addition to his
existing leadership responsibilities for Group Finance, Ewen
assumed responsibility for the oversight of the Group's
transformation programme in February 2021 and will assume
responsibility for the Group's mergers and acquisitions activities
in April 2021.
Career: Ewen was Chief
Financial Officer of The Royal Bank of Scotland Group plc from 2014
to 2018. Prior to this, Ewen spent 25 years with Credit Suisse,
where his last role was co-Head of the EMEA Investment Banking
Division and co-Head of the Global Financial Institutions
Group.
External appointments: None
Reasons for re-election: Ewen's
comprehensive background within the banking and financial industry,
including advisory and leadership roles, helps ensure strong
financial management to achieve the Group's
strategy.
Independent non-executive Directors
James Anthony Forese (58)
Independent non-executive Director
Appointed to the Board: May 2020
Committee Membership: Group Audit Committee, Group Remuneration
Committee and the Nomination & Corporate Governance
Committee
Skills and experience: James has over 30 years' international
business and management experience in the finance
industry.
Career: James formerly
served as President of Citigroup. He began his career in securities
trading with Salomon Brothers, one of Citigroup's predecessor
companies, in 1985. In addition to his most recent role as
President and Chief Executive Officer of Citigroup's Institutional
Clients Group, he has been Chief Executive of its Securities and
Banking division and head of its Global Markets business. On 1
January 2021, James became a non-executive Director of HSBC North
America Holdings Inc. ("HNAH") and will assume the role of
non-executive Chair of HNAH following the AGM.
External appointments: Non-executive Chair of Global Bamboo Technologies
and Trustee of Colby College.
Reasons for election: James is an experienced executive with
wide-ranging leadership experience within the banking industry. His
experience of international business and management spans over
three decades and, as a non-executive director, he contributes to
the Board through his deep experience of working in global markets,
investment and private banking.
Steven Craig Guggenheimer (55)
Independent non-executive Director
Appointed to the Board: May 2020
Committee Membership: Group Risk Committee and the Nomination &
Corporate Governance Committee.
Skills and experience: Steven is an experienced technology
executive with a strong track record of advising businesses on
digital transformation. He brings extensive insight into
technologies ranging from artificial intelligence to Cloud
computing.
Career: Steven has more
than 25 years' experience at Microsoft, where he has held a variety
of senior leadership roles. These include: Corporate Vice President
for AI Business, Corporate Vice President of AI and ISV Engagement,
Chief Evangelist, and Corporate Vice President, Original Equipment
Manufacturer.
External appointments: Non-executive Director of Forrit Technologies
Limited, Advisor to Tensility Venture Fund and Advisory Board
Member of 5G Open Innovation Lab.
Reasons for election: Steven's career spans a number of management and
leadership roles within the technology sector. His
valuable contribution
to the Board arises from his experience in delivering cutting edge
technology and the development of industry leading applications and
services globally. He brings unique perspectives to the Board's
deliberations.
Irene Lee (67)
Independent non-executive Director
Appointed to the Board: July 2015
Committee membership: Group Remuneration Committee and the
Nomination & Corporate Governance Committee
Skills and experience: Irene has more than 40 years' experience in
the finance industry, having held senior investment banking and
fund management roles in the UK, the US and
Australia.
Career: Irene held senior
positions at Citibank, the Commonwealth Bank of Australia and
SealCorp Holdings Limited. Other past appointments include being a
member of the Advisory Council for J.P. Morgan Australia, a member
of the Australian Government Takeovers Panel and a non-executive
Director of Cathay Pacific Airways Limited.
External appointments: Executive Chair of Hysan Development Company
Limited, non-executive Director of The Hongkong and Shanghai
Banking Corporation Limited, Member of the Exchange Fund Advisory
Committee of the Hong Kong Monetary Authority and Non-executive
Director of Hang Seng Bank Limited (to be appointed as
Non-executive Chair of Hang Seng Bank Limited with effect from the
conclusion of its 2021 AGM).
Reasons for re-election: Irene
is a highly valued and experienced non-executive director with a
wealth of global, investment banking and fund management experience
in a number of renowned international financial institutions. She
has contributed extensively to Board discussions with specific
geographic and commercial expertise which is of particular
relevance to the delivery of the Group's
strategy.
Dr José Antonio Meade Kuribreña (52)
Independent non-executive Director
Appointed to the Board: March 2019
Committee Membership: Group Risk Committee and the Nomination &
Corporate Governance Committee
Skills and experience: José has extensive experience across a
number of industries, including in public administration, banking,
financial policy and foreign affairs.
Career: Between 2011 and
2017, José held Cabinet-level positions in the federal
government of Mexico, including as Secretary of Finance and Public
Credit, Secretary of Social Development, Secretary of Foreign
Affairs and Secretary of Energy. Prior to his appointment to the
Cabinet, he served as Undersecretary and as Chief of Staff in the
Ministry of Finance and Public Credit. José
is also a former Director General of Banking and Savings at the
Ministry of Finance and Public Credit and served as Chief Executive
Officer of the National Bank for Rural Credit.
External appointments: Commissioner and Board Member of the Global
Commission on Adaptation and non-executive Director of
Alfa S.A.B. de C.V.
Reasons for re-election: José
has a wealth of experience in public administration, banking and
financial policy. In addition to this, he has connectivity to the
Mexican market and provides invaluable enhancement to the Board's
knowledge and experience in this region.
Eileen K Murray (63)
Independent non-executive Director
Appointed to the Board: July 2020
Committee Membership: Group Audit Committee, Group Risk Committee
and the Nomination & Corporate Governance
Committee
Skills and experience: Eileen is an accomplished executive with
extensive knowledge in financial technology and corporate strategy
from a career spanning more than 40 years.
Career: Eileen most
recently served as co-Chief Executive Officer of Bridgewater
Associates, LP. Prior to joining Bridgewater, she was Chief
Executive Officer for Investment Risk Management LLC and President
and co-Chief Executive Officer of Duff Capital
Advisors. She
started her professional career in 1984 at Morgan Stanley, where
she held several senior positions including Controller, Treasurer,
and Global Head of Technology and Operations, as well as Chief
Operating Officer for its Institutional Securities Group. From 2002
to 2005, she was Head of Global Technology, Operations and Product
Control at Credit Suisse and served on its management and executive
board.
External appointments: Chair of the Financial Industry Regulatory
Authority, Independent Board Member of Compass Inc.,
non-executive Director of The Guardian Life Insurance Company of
America, Director of HumanityCorp and non-executive
Director of Atlas Crest Investment Corp.
Reasons for election: Eileen
has significant finance, technology and transformation experience
in the banking sector. This experience, alongside a detailed
understanding of regulatory requirements and comfort with a breadth
of financial products, means that she is able to bring important
insights to Board discussions.
David Thomas Nish (60)
Independent non-executive Director
Appointed to the Board: May 2016
Senior Independent non-executive Director since February
2020
Committee Membership: Group Audit Committee (Chair), Group Risk
Committee, Group Remuneration Committee and the Nomination &
Corporate Governance Committee
Skills and experience: David has substantial international
experience of financial services, corporate governance, financial
accounting and operational transformation.
Career: David served as
Group Chief Executive Officer of Standard Life plc between 2010 and
2015, having joined the company in 2006 as Group Finance Director.
He is also a former Group Finance Director of Scottish Power plc
and was a partner at Price Waterhouse. David has also previously
served as a non-executive Director of HDFC Life (India), Northern
Foods plc, London Stock Exchange Group plc, the UK Green Investment
Bank plc and Zurich Insurance Group Ltd.
External appointments: Non-executive Director of Vodafone Group
plc.
Reasons for re-election: David is an experienced executive and
non-executive director, having held a number of board appointments
across a variety of sectors, including insurance and asset
management. He adds to the Board discussion through his experience
in delivering significant performance improvements, delivering
strategic change and in financial accounting. His extensive
experience in stakeholder management and financial accounting means
that he is well placed to act as our Senior Independent
non-executive Director and to lead the Group Audit
Committee.
Jackson Peter Tai (70)
Independent non-executive Director
Appointed to the Board: September 2016
Committee Membership: Group Risk Committee (Chair),Group Audit
Committee and the Nomination & Corporate Governance
Committee
Skills and experience: Jackson has significant experience as a
non-executive Director, having held senior operating and governance
roles across Asia, North America and Europe.
Career: Jackson was Vice
Chairman and Chief Executive Officer of DBS Group and DBS Bank Ltd.
between 2002 and 2007, having served as Chief Financial Officer and
then as President and Chief Operating Officer. He was previously a
managing director and senior officer for Asia-Pacific, and
executive director and Head of Japan Capital Markets in the
investment banking division of J.P. Morgan & Co. Incorporated,
where he worked for 25 years. Other former appointments
include non-executive Director of Canada Pension Plan Investment
Board, Royal Philips N.V., Bank of China Limited, Singapore
Airlines, NYSE Euronext, ING Groep N.V., CapitaLand Limited,
SingTel Ltd. and Jones Lang LaSalle Inc. He also served as Vice
Chairman of Islamic Bank of Asia.
External appointments: Non-executive Director of Eli Lilly and
Company and
non-executive Director of
MasterCard Incorporated.
Reasons for re-election: In
addition to a distinguished career in investment banking, Jackson
is an experienced director who has held a number of non-executive
and committee chair roles on various international boards. He has
deep expertise of operating within Asia. He provides the Board with
valuable contribution as chair of the Group Risk Committee as well
as on financial and strategic matters.
Pauline Franҫoise Marie de Beaufort - van der Meer Mohr
(61)
Independent non-executive Director
Appointed to the Board: September 2015
Committee Membership: Group Remuneration Committee (Chair), Group
Audit Committee, Group Risk Committee and the Nomination &
Corporate Governance Committee
Skills and experience: Pauline has extensive legal, corporate
governance and human resources experience across a number of
different sectors.
Career: Pauline served on
the Supervisory Board of ASML Holding N.V. between 2009 and 2018.
She was formerly President of Erasmus University Rotterdam, a
member of the Dutch Banking Code Monitoring Committee and a Senior
Vice President and Head of Group Human Resources Director at ABN
AMRO Bank N.V., and TNT N.V. She also held various executive roles
at the Royal Dutch Shell Group.
External appointments: Chair of the Dutch Corporate Governance Code
Monitoring Committee, Chair of the Supervisory Board of EY
Netherlands, Deputy Chair of the Supervisory Board of Royal DSM
N.V., Member of the Selection and Nomination Committee of the
Supreme Court of the Netherlands, Member of the Capital Markets Committee of the
Dutch Authority for Financial Markets and non-executive Director of Viatris,
Inc.
Reasons for re-election: Pauline
is an experienced executive and non-executive director, with
experience gained across a number of different sectors and at both
public and private organisations. Her extensive legal, corporate
governance and human resources experience position her well to lead
the Remuneration Committee and also bring invaluable insights to
the Board on a range of topics.
Save as disclosed above and in Appendix 6 there are no further
matters or particulars required to be disclosed pursuant
to Rule 13.51(2) of the Rules Governing the Listing of Securities
on The Stock Exchange of Hong Kong Limited ("Hong Kong Listing
Rules").
4 and 5. Re-appointment of Auditor and remuneration of
Auditor
The current appointment of PricewaterhouseCoopers LLP ("PwC") as
Auditor of the Company terminates at the conclusion of this year's
AGM. PwC has expressed its willingness to continue in office. The
Group Audit Committee and the Board have recommended that PwC be
re-appointed until the conclusion of the next general meeting of
the Company at which accounts are laid and that the Group Audit
Committee be authorised to determine its remuneration.
An analysis of the remuneration paid in respect of audit and
non-audit services provided by our Auditor and their affiliates for
each of the past three years is disclosed on page 307 in the 2020
Annual Report & Accounts.
6. Political Donations
The UK Companies Act 2006 (the "Act") requires companies to obtain
shareholder authority for donations to registered political parties
and other political organisations, totalling more than £5,000
in any 12 month period and for any political expenditure, subject
to limited exceptions.
In accordance with Group policy, HSBC does not make any political
donations or incur political expenditure within the ordinary
meaning of those words. We have no intention of altering this
policy. However, the definitions of political donations, political
parties, political organisations and political expenditure used in
the Act are very wide. As a result, they may cover routine
activities that form part of the normal business activities of the
Group and are an accepted part of engaging with stakeholders to
ensure that issues and concerns which affect the Group's operations
are considered and addressed, but which would not be considered as
political donations or political expenditure in the ordinary sense
of those words. Activities including contributions to or support
for bodies such as those concerned with policy review and law
reform or with the representation of the business community or
sections of it may be deemed to be political donations or
expenditure as defined by the Act. The activities referred to above
are not designed to influence public support for any political
party or political outcome. The authority is being sought on a
precautionary basis only to ensure that neither the Company nor any
of its subsidiaries inadvertently breaches the Act. Resolution 6
proposes a cap of £200,000 per category of political donation
or expenditure subject to an aggregate overall cap of £200,000
per annum for all such political donations and
expenditure.
If Resolution 6 is passed, this authority will be effective until
the conclusion of the 2022 Annual General Meeting or the close of
business on 30 June 2022, whichever is the earlier.
7. Authority to allot shares
This year, the Directors are again seeking authority under section
551 of the Act to allot shares up to an aggregate total nominal
amount of two-thirds of the Company's issued ordinary share capital
subject to the restrictions set out below. The authority given to
the Directors at the 2020 Annual General Meeting will expire at the
conclusion of the 2021 AGM. Resolution 7 will give the Directors
authority to allot new ordinary shares (or rights to ordinary
shares) of up to an aggregate nominal amount of US$6,807,599,750,
representing two-thirds of the Company's issued ordinary share
capital. However, that authority is limited as
follows:
(a)
under paragraph (a) of Resolution 7, up to an aggregate nominal
amount of US$2,042,279,925, representing approximately 20 per cent
of the Company's issued ordinary share capital, may be used for
general allotments;
(b)
under paragraph (b) of Resolution 7, the Directors would have
authority to make allotments which exceed the 20 per cent authority
in paragraph (a) of Resolution 7 in connection with a pre-emptive
offering such as a rights issue, open offer or a scrip dividend up
to an aggregate nominal amount, when combined with allotments made
under paragraph (a), of US$3,403,799,875. This represents
approximately one-third of the issued ordinary share capital of the
Company; and
(c)
under paragraph (c) of Resolution 7, the Directors would have
authority to allot up to an aggregate nominal amount of
US$6,807,599,750 in connection with a rights issue only. This
represents approximately two-thirds of the Company's issued
ordinary share capital. Any allotments or grants under paragraphs
(a) or (b) of Resolution 7 will reduce the level of this two-thirds
authority.
In Resolution 7 paragraph (d), the Board is again seeking authority
to issue sterling, US dollar and euro preference shares without
having first to obtain the consent of shareholders at a general
meeting. These preference shares were created to underpin issues of
preferred securities, which are a tax efficient form of regulatory
capital. If approved by shareholders, this authority will give
Directors the flexibility to raise regulatory capital should
circumstances so require. If any preference shares were to be
issued they would, subject to regulatory approval, be redeemable at
the Company's option and carry no voting rights other than in
exceptional circumstances, but would rank in priority to the
Company's ordinary shares with respect to participation in any
return of capital.
Other than pursuant to the Company's employee share plans, the
Board has no present intention of issuing any further shares
pursuant to the authority in Resolution 7.
If granted, this authority will be effective until the conclusion
of the 2022 Annual General Meeting or the close of business on 30
June 2022, whichever is the earlier.
As at 10 March 2021, being the latest practicable date prior to
printing of this document, the Company held 325,273,407 of its
ordinary shares in treasury, representing 1.57 per cent of the
issued ordinary share capital (including treasury shares) and 1.59
per cent of the issued ordinary share capital (excluding treasury
shares).
8 and 9. Disapplication of pre-emption rights
Resolutions 8 and 9 are to approve the disapplication of statutory
pre-emption rights under the Act in respect of certain allotments
of shares made under the authorities in Resolution 7, in line with
the guidelines on share capital management issued by the UK's
Investment Association (the "IA Guidelines") and the Pre-Emption
Group's Statement of Principles on Disapplying Pre-Emption Rights.
If the Directors wish to exercise the authority under Resolution 7
and offer shares (or sell any shares which the Company may purchase
or elect to hold as treasury shares) for cash, the Act requires
that unless shareholders have given specific authority for the
disapplication of their statutory pre-emption rights, the new
shares must be offered first to existing shareholders in proportion
to their existing shareholdings. Resolutions 8 and 9 seek to give
the Directors flexibility, in certain circumstances, to allot new
shares (or to grant rights over shares) for cash or to sell
treasury shares for cash without first offering them to existing
shareholders in proportion to their holdings.
Resolution 8 seeks to give the Directors additional flexibility in
the context of pre-emptive offerings such as a rights issue, open
offer, or scrip dividend, to deal with legal or practical
difficulties in countries outside the UK which prevent the offer
being made on a purely pro rata basis. It also seeks a
disapplication of pre-emption rights in respect of allotments or
sales of treasury shares for cash up to an aggregate nominal amount
of US$510,569,981, representing a further five per cent of the
Company's issued ordinary share capital. This is designed to
reflect the guidelines contained in the Pre-Emption Group's
Statement of Principles on Disapplying Pre-Emption Rights, which
impose a five per cent limit for non-pre-emptive allotments for
cash, excluding certain allotments such as those under employee
share plans.
Resolution 9 is proposed as a separate resolution, in accordance
with a recommendation of the Pre-Emption Group and the IA
Guidelines, to authorise the Directors to allot an additional
quantity of shares (or sell treasury shares) for cash otherwise
than to existing shareholders pro rata to their holdings up to an
aggregate nominal amount of US$510,569,981, representing a further
five per cent of the Company's issued share capital. The additional
authority in Resolution 9 may be used only in connection with the
financing (or refinancing) of an acquisition or specified capital
investment. In accordance with the Pre-Emption Group's Statement of
Principles, the Directors confirm that they intend to use the
authority sought in Resolution 9 only in connection with such an
acquisition or specified capital investment which is announced
contemporaneously with the issue, or which has taken place in the
preceding six month period and is disclosed in the announcement of
the issue, and will provide shareholders with information regarding
the transaction if the authority is used. Other than allotments
under employee share plans, the Board has no present intention of
issuing any further ordinary shares pursuant to the new general
authorities in Resolutions 8 and 9. No issue will be made which
would effectively change the control of the Company or the nature
of its business without the prior approval of shareholders at a
general meeting.
If granted, the authorities sought in Resolutions 8 and 9 will be
effective until the conclusion of the 2022 Annual General Meeting
or the close of business on 30 June 2022, whichever is the
earlier.
In addition, the Company is seeking authority under Resolutions 12
and 13 to allot shares or rights to subscribe for shares in
connection with the issue of Contingent Convertible Securities
("CCSs"), and to disapply statutory pre-emption rights in respect
of such allotment, in each case up to an amount equivalent to
approximately 20 per cent of the Company's issued ordinary share
capital. Assuming Resolutions 12 and 13 are passed, the authority
sought under Resolutions 7, 8 and 9 would not be utilised for the
purpose of the issuance of CCSs.
The Company also confirms that it does not intend to issue more
than 7.5 per cent of its issued ordinary share capital (excluding
treasury shares) in any rolling three-year period, without prior
consultation with shareholders, save as permitted in connection
with an acquisition or specified capital investment as described
above. However, if passed, Resolutions 12 and 13 would permit this
level to be exceeded in connection with the issue of CCSs or the
conversion or exchange of CCSs.
Unless otherwise stated, references in these Explanatory Notes to
the issued ordinary share capital, and to percentages or fractions
of the issued ordinary share capital, are to the issued ordinary
share capital of the Company (calculated exclusive of treasury
shares) as at 10 March 2021, being the latest practicable date
prior to printing this document.
10. Addition of any repurchased shares to general authority
to allot shares
Resolution 10 seeks to extend the Directors' authority to allot
shares and grant rights to subscribe for or convert any security
into shares pursuant to paragraph (a) of Resolution 7 to include
the shares repurchased by the Company under the authority sought by
Resolution 11. This is permitted by the Hong Kong Listing
Rules.
11. Purchase of ordinary shares by the Company
The purpose of the authority to be conferred by this item is to
enable the Company to make market purchases of its own
shares.
The Directors consider that it is appropriate to seek authority for
the Company to make market purchases of up to 10 per cent of its
own ordinary shares and the maximum and minimum prices at which
they may be bought, exclusive of expenses, are specified in the
resolution. As announced by the Company on 23 February 2021, the
Company will consider share buy-backs in years of strong returns
where no immediate opportunity for capital redeployment exists. It
remains the Directors' policy to maintain a robust capital base, a
policy which has consistently been one of the Group's strengths. As
the Group executes its strategy, the appropriate level of capital
to be held will be continually reviewed. Having this authority will
give Directors the flexibility, if they consider it in the
interests of the Company and shareholders, to purchase ordinary
shares in the market in appropriate circumstances, for example, in
the event that the Company is unable to deploy the retained capital
to create incremental value for shareholders, subject to regulatory
approval. The Company may decide to retain any shares it purchases
as treasury shares with a view to a possible re-issue at a later
date, transfer in connection with an employee scheme, or it may
cancel the shares.
Shareholders should note that under section 693 of the Act, the
Company is only permitted to make market purchases of its ordinary
shares on a recognised investment exchange. Of the venues where the
Company's ordinary shares are listed, only the London Stock
Exchange is currently designated as a recognised investment
exchange.
The Act permits the Company to elect to hold in treasury any
ordinary shares it may repurchase, rather than automatically
cancelling those shares. Approval has been received from the
relevant regulatory authorities in Hong Kong to enable the Company
to hold repurchased shares in treasury. The conditional waiver
granted by the Hong Kong Stock Exchange on 19 December 2005 was
granted on the basis of certain agreed modifications to the Hong
Kong Listing Rules applicable to the Company. Details of the
modifications are available at www.hsbc.com and the Hong Kong Stock
Exchange's HKEX news website at www.hkexnews.hk. Copies of the
modifications are also available from the Group Company Secretary
and Chief Governance Officer, HSBC Holdings plc, 8 Canada Square,
London E14 5HQ, United Kingdom and the Corporation Secretary and
Regional Company Secretary Asia-Pacific, The Hongkong and Shanghai
Banking Corporation Limited, 1 Queen's Road Central, Hong Kong
SAR.
Further details regarding the proposed authority to be given to the
Company to purchase its own shares and the waiver granted by the
Hong Kong Stock Exchange are set out in Appendix 2.
The total number of options to subscribe for ordinary shares
outstanding on 10 March 2021, being the latest practicable date
prior to printing of this document, was 128,042,682 which
represented 0.63 per cent of the issued ordinary share capital
(excluding treasury shares) as at that date. If the Company were to
purchase the maximum number of ordinary shares permitted by this
resolution, the options outstanding on 10 March 2021 would
represent 0.70 per cent of the issued ordinary share capital
(excluding treasury shares) as at 10 March 2021.
If Resolution 11 is passed, the authority will be effective until
the conclusion of the 2022 Annual General Meeting or the close of
business on 30 June 2022, whichever is earlier.
12 and 13. Additional authority to allot equity securities
in relation to the issue of Contingent Convertible Securities
("CCSs") and limited disapplication of pre-emption
rights
The effect of Resolution 12 is to give the Directors the authority
to allot shares and grant rights to subscribe for, or to convert,
any security into ordinary shares in the Company up to an aggregate
nominal amount of US$2,042,279,925 equivalent to approximately 20 per cent of the
ordinary shares in issue on 10 March 2021, being the latest
practicable date prior to printing this document. This authority
relates to the issue of CCSs.
CCSs are debt securities which benefit from a specific regulatory
capital treatment under European Union and United Kingdom
legislation. They are treated as Additional Tier 1 Capital and, as
a banking group, HSBC is able to hold a certain amount of its Tier
1 Capital in the form of Additional Tier 1 Capital. The CCSs will
be converted or exchanged into ordinary shares if a defined trigger
event occurs (which currently is the HSBC Group's Common Equity
Tier 1 Capital ratio falling below 7 per cent). Issuing CCSs gives
the Company greater flexibility to manage its capital in the most
efficient and economic way for the benefit of the shareholders.
Please see Appendix 1 for more information on CCSs.
This authority is in addition to the authority proposed in
Resolutions 7, 8 and 9, which contain the general authority sought
on an annual basis in line with the
IA Guidelines and the Hong Kong Listing Rules. If Resolutions 12
and 13 are passed, the Company will only issue CCSs pursuant to the
authority granted under these resolutions and not under the
authority granted under Resolutions 7, 8 and 9. Although the
authority in Resolutions 12 and 13 is not contemplated by the IA
Guidelines, it has previously been discussed with the Investment
Association with no objection.
The effect of Resolution 13 is to give the Directors' authority to
allot CCSs, or shares issued upon conversion or exchange of CCSs,
without the need to first offer them to existing shareholders. If
passed, Resolution 13 will authorise the Directors to allot shares
and grant rights to subscribe for, or to convert any security into,
shares in the Company (or to sell treasury shares held by the
Company following any purchase of its own shares) on a
non-pre-emptive basis up to an aggregate nominal amount of
US$2,042,279,925, representing approximately 20 per cent of the
ordinary shares in issue on 10 March 2021 such authority to be
exercised in connection with the issue of CCSs. As at 10 March
2021, being the latest practicable date prior to printing of this
document, the Company held 325,273,407 of its ordinary shares in
treasury, representing 1.57 per cent of the issued ordinary share
capital (including treasury shares) and 1.59 per cent of the issued
ordinary share capital (excluding treasury shares).
The authorities in Resolutions 12 and 13 will be utilised as
considered desirable to comply with or maintain compliance with the
regulatory capital requirements arising in connection with the
relevant European Union and United Kingdom legislation and the
prudential regulatory requirements imposed by the Prudential
Regulation Authority ("PRA") and only for those purposes. The
Company will not utilise the authority in Resolutions 12 and 13 to
issue new securities for any other purposes. However, pursuant to
the authority under Resolutions 12 and 13, the Company may issue
additional securities in order to manage the redemption of
outstanding CCSs.
The approvals would be effective until the conclusion of the
Company's 2022 Annual General Meeting or the close of business on
30 June 2022, whichever is the earlier. The Directors expect to
seek similar authorities on an annual basis.
14. Notice period for meetings
The Act provides that the minimum notice period for general
meetings of the Company is 21 days unless shareholders approve
a shorter notice period. The passing of this resolution would
enable the Company to call general meetings (other than annual
general meetings) on a minimum of 14 clear days' notice. This
shorter notice period of between 14 and 20 days would not be used
as a matter of routine, but only when the Directors determine that
calling a meeting on less than 21 days' notice is merited by the
business of the meeting and consider it to be to the advantage of
shareholders as a whole. The approval would be effective until the
conclusion of the Company's 2022 Annual General Meeting or the
close of business on 30 June 2022, whichever is the earlier, when
it is intended that a similar resolution will be
proposed.
15. Climate change resolution
Resolution 15 focuses on actions HSBC is proposing to take in
connection with its ambition to align its provision of finance with
a net zero outcome by 2050, consistent with the goals of the Paris
Agreement on climate change, as previously announced in October
2020. The Resolution, including the supporting statement in
Appendix 3, has been discussed and agreed with ShareAction and a
group of HSBC shareholders.
ShareAction together with a number of shareholders ("co-filers")
had originally proposed an alternative resolution on climate change
to be put to the AGM (the "Requisitioned Climate
Resolution"). After constructive and extensive dialogue and
engagement with ShareAction, certain of the co-filers and other
shareholders, we are pleased that ShareAction, on behalf of the
co-filers of the Requisitioned Climate Resolution, has withdrawn
the request to put the Requisitioned Climate Resolution to the AGM.
ShareAction and certain of the co-filers of the Requisitioned
Climate Resolution recommend that shareholders vote in favour of
Resolution 15. Your Board recommends shareholders vote in favour of
the Resolution for the reasons set out in Appendix 3 on pages 36 to
38.
16. Shareholder requisitioned resolution - Midland Clawback
Campaign
Resolution 16 is a special resolution that has not been proposed by
your Board but has been requisitioned by a group of shareholders
for the Midland Clawback Campaign. Resolution 16 has been supplied
to HSBC by a representative of the shareholder group proposing
Resolution 16 and it should be read together with their explanatory
statement in support of the proposed resolution set out in Appendix
4 on pages 39 to 40. Your Board's response, which sets out why the
Directors unanimously recommend that you vote against Resolution
16, is provided at Appendix 5 on pages 41 to 44.
Your Board considers that Resolution 16 is not in the best
interests of the Company and its shareholders as a whole and
unanimously recommends that you vote against Resolution
16.
Information about the 2021 Annual General Meeting
Venue and attendance
At the time of preparing this document, Covid-19 restrictions
remain in place which would prevent shareholders from attending the
AGM in person. The health and safety of our shareholders, our
employees and the wider communities in which we operate remains our
primary concern. Therefore, as it stands, the meeting at the
physical location of the AGM will be a closed meeting and will be
held at HSBC's offices at 8 Canada Square, London E14 5HQ. Only the
minimum number of persons required to form a quorum and to conduct
the business of the meeting will attend the AGM in
person.
However, for the first time, we are enabling shareholders to
participate electronically in the AGM. Shareholders wishing to
attend the AGM electronically should follow the instructions set
out on pages 29 to 30 and Appendix 7.
We will continue to monitor the situation as we approach the AGM.
The UK Government's roadmap for easing lockdown restrictions in
England published on 22 February 2021 envisages the potential for
indoor events of up to 1,000 people or half a venue's capacity (if
lower) to take place no earlier than 17 May 2021. However, this is
subject to a number of contingencies and there can be no guarantee
that this will happen. If restrictions have eased in sufficient
time and circumstances enable it, we will seek to change the
venue to
permit shareholders to attend the meeting in person if they wish.
Any changes will be made in line with the UK Government's guidance
and with health and safety as a priority. We expect that there will
continue to be some social distancing restrictions in place on the
date of the AGM that will continue to have a significant impact on
our arrangements, including the number of permitted attendees in
person and how the AGM is conducted. We would therefore still
recommend that shareholders do not attend in person and instead
participate in the AGM electronically.
You should continue to monitor the Company's website
at www.hsbc.com/agm as
well as our stock exchange announcements for any
updates.
Entitlement to attend and
vote
Pursuant to the Uncertificated Securities Regulations 2001 (as
amended), changes to entries on the principal register of members
of the Company maintained in England (the "Principal Register") or
either the Hong Kong or Bermuda Overseas Branch Registers of the
Company (the "Branch Registers"), as appropriate, after 12.01am
London time (7.01am Hong Kong time) on Thursday, 27 May 2021 or
12.01am London time (7.01am Hong Kong time) on the day immediately
before the day of any adjourned meeting (as the case may be) shall
be disregarded in determining the rights of a member to attend or
vote at the AGM or any adjourned meeting (as the case may be).
Accordingly, a member entered on the Principal Register or the
Branch Registers at 12.01am London time (7.01am Hong Kong time) on
Thursday, 27 May 2021 or 12.01am London time (7.01am Hong Kong
time) on the day immediately before the day of any adjourned
meeting (as the case may be) shall be entitled to attend and vote
at the AGM or any adjourned meeting (as the case may be) in respect
of the number of such shares entered against the member's name at
that time.
Voting
Voting at the AGM will be conducted by way of a poll. This means
that each shareholder present or represented (in person or
electronically) will be able to exercise one vote for each share
held. In the case of joint registered holders of any share, the
vote of the senior who tenders a vote, whether in person or by
proxy, shall be accepted to the exclusion of the votes of the other
joint holder(s). For this purpose, seniority shall be determined by
the order in which the names of the holders stand in the Principal
Register or the Branch Registers of the Company, as
appropriate.
As shareholders are not currently able to attend the AGM in person,
shareholders will be able to vote by either submitting a proxy in
advance of the AGM or by voting on the day of the AGM via the Lumi
website following the instructions set out on pages 29 to 30 and in
Appendix 7 for those shareholders attending the AGM electronically.
Even if restrictions have eased by the day of the AGM such that
attendance in person would be permitted, for safety reasons we
would still recommend that shareholders do not attend the AGM in
person and instead participate in the AGM
electronically.
Shareholders are strongly encouraged to appoint the Chairman of the
AGM as their proxy, even if they intend to attend the AGM
electronically. This is to
ensure that your vote is counted if you are unable to attend
electronically on the day of the AGM.
The completion and submission of a form of proxy will not preclude
you from attending and voting electronically at the AGM (or
attending and voting in person if restrictions are eased by the day
of the AGM). Information on how to appoint a proxy is set out
below.
Shareholders who attend the AGM electronically will be able to vote
on all the resolutions put to the AGM. Instructions on how
shareholders can exercise their votes whilst attending the AGM
electronically are set out below.
Following the conclusion of the AGM, voting results will be
published on the Company's website at
www.hsbc.com/agm.
Appointing a proxy
Shareholders are strongly encouraged to vote on the resolutions in
advance of the AGM by completing a proxy form appointing the
Chairman of the AGM as your proxy. You may appoint the Chairman of
the AGM or a person of your choice to be your proxy to attend,
speak and vote on your behalf. A proxy need not be a member of the
Company. You may appoint more than one proxy, provided that each
proxy is appointed to exercise the rights attached to a different
share or shares held by you. If you require additional forms of
proxy, you may photocopy the original form of proxy enclosed or ask
our registrar to send you additional forms (see "How to submit your
form of proxy" below for the registrar's address).
As explained above under "Voting", shareholders are strongly
encouraged to appoint the Chairman of the AGM as their proxy, even
if they intend to attend the AGM electronically. This
is to ensure that your vote is counted if you are unable to attend
electronically on the day.
If you appoint a proxy, other than the Chairman of the AGM, and
they wish to attend the meeting electronically, they will need to
contact the Company's registrar before 11.00am London time (6.00pm
Hong Kong time) on Wednesday, 26 May 2021 to arrange for the
necessary details to be sent to them. See further details set out
on pages 29 to 30.
A form of proxy is enclosed with this document or may be accessed
at www.hsbc.com/proxy.
How to submit your form of proxy
The form of proxy must be received by 11.00am London time (6.00pm
Hong Kong time) on Wednesday, 26 May 2021, or not less than 48
hours before the time of the holding of any adjourned
meeting.
You may submit your form of proxy electronically at
www.hsbc.com/proxy by entering your Shareholder Reference Number
and the Personal Identification Number which is either printed on
your form of proxy or which has been sent to you by email if you
have registered an email address to receive electronic
communications.
Alternatively, you may send your completed form of proxy
to:
●
Computershare Investor Services PLC, The Pavilions, Bridgwater
Road, Bristol, BS99 6ZY, United Kingdom;
●
Computershare Hong Kong Investor Services Limited, Rooms 1712-1716,
17th Floor,
Hopewell Centre, 183 Queen's Road East, Hong Kong SAR;
or
●
Investor Relations Team, HSBC Bank Bermuda Limited, 37 Front
Street, Hamilton HM 11, Bermuda.
For shares held through CREST, proxy appointments may be submitted
via the CREST proxy voting system (see section on "CREST" set out
below).
In order to be valid, the completed form of proxy (together with
any power of attorney or other authority under which it is signed,
or a copy of such authority certified notarially or in some other
way approved by the Board) must be deposited by 11.00am London time
(6.00pm Hong Kong time) on Wednesday, 26 May 2021, or not less than
48 hours before the time of the holding of any adjourned meeting,
at the offices of the Company's registrar (see above for the
registrar's address). Any power of attorney or other authority
relating to an appointment of a proxy cannot be submitted
electronically and must be deposited as referred to above for the
appointment to be valid.
CREST
CREST members who wish to appoint a proxy or proxies by using the
CREST electronic proxy appointment service may do so for the AGM or
any adjourned meeting by following the procedures described in the
CREST manual. CREST personal members or other CREST sponsored
members, and those CREST members who have appointed a voting
service provider, should refer to their CREST sponsor or voting
service provider, who will be able to take the appropriate action
on their behalf.
In order for a proxy appointment or instruction made by means of
CREST to be valid, the appropriate CREST message (a "CREST Proxy
Instruction") must be properly authenticated in accordance with
Euroclear UK & Ireland Limited's specifications and must
contain the information required for such instructions, as
described in the CREST manual. The message, regardless of whether
it constitutes the appointment of a proxy or is an amendment to the
instruction given to a previously appointed proxy, must, in order
to be valid, be transmitted so as to be received by the issuer's
agent (ID 3RA50) by 11.00am London time (6.00pm Hong Kong time) on
Wednesday, 26 May 2021, or not less than 48 hours before the time
of the holding of any adjourned meeting. For this purpose, the time
of receipt will be taken to be the time (as determined by the
timestamp applied to the message by the CREST Applications Host)
from which the issuer's agent is able to retrieve the message by
enquiry to CREST in the manner prescribed by CREST. After this
time, any change of instructions to proxies appointed through CREST
should be communicated to the appointees through other
means.
CREST members, and, where applicable, their CREST sponsor or voting
service providers should note that Euroclear UK & Ireland
Limited does not make available special procedures in CREST for any
particular messages. Normal system timings and limitations will
therefore apply in relation to the input of CREST Proxy
Instructions. It is the responsibility of the CREST member
concerned to take (or, if the CREST member is a CREST personal
member or sponsored member or has appointed a voting service
provider, to procure that his or her CREST sponsor or voting
service provider takes) such action as shall be necessary to ensure
that a message is transmitted by means of the CREST system by any
particular time. In this connection, CREST members and, where
applicable, their CREST sponsors or voting service providers are
referred, in particular, to those sections of the CREST manual
concerning practical limitations of the CREST system and
timings.
Pursuant to Regulation 35(5)(a) of the Uncertificated Securities
Regulations 2001 (as amended) the Company may treat as invalid a
CREST Proxy Instruction if the Company has actual notice
that:
●
information in the instruction is incorrect;
●
the person expressed to have sent the instruction did not in fact
send it; or
●
the person sending the instruction on behalf of the relevant
shareholder did not have the authority to do so.
Nominated persons
The right to appoint a proxy does not apply to persons whose shares
are held on their behalf by another person who has been nominated
to receive communications from the Company in accordance with
section 146 of the UK Companies Act 2006 (the "Act") ("nominated
persons"). Nominated persons may have a right under an agreement
with the registered shareholder who holds the shares on their
behalf to be appointed (or to have someone else appointed) as a
proxy for the AGM. Alternatively, if nominated persons do not have
such a right, or do not wish to exercise it, they may have a right
under such an agreement to give instructions to the person holding
the shares as to the exercise of voting rights at the
AGM.
The main point of contact for nominated persons remains the
registered shareholder (for example the stockbroker, investment
manager, custodian or other person who manages the investment). Any
changes or queries relating to nominated persons' personal details
and holdings (including any administration thereof) must continue
to be directed to the registered shareholder and not the Company's
registrar. The only exception is where the Company, in exercising
one of its powers under the Act, writes to nominated persons
directly for a response.
Corporate representatives
Any corporation which is a shareholder can appoint one or more
corporate representatives who may exercise on its behalf all of its
powers as a shareholder provided that, if it is appointing more
than one corporate representative, it does not do so in relation to
the same share or shares. If restrictions are eased and attendance
is permitted by the day of the AGM and a corporate representative
wishes to attend in person, any such representative should bring to
the meeting written evidence of his appointment, such as a
certified copy of a board resolution of, or a letter from, the
corporation concerned confirming the appointment.
If you appoint a corporate representative and they wish to attend
the meeting electronically, they will need to contact the Company's
registrar before 11.00am London time (6.00pm Hong Kong time) on
Wednesday, 26 May 2021 to arrange for the necessary details to be
sent to them. See further details set out on pages 29 to
30.
Shareholders' power to require
circulation of resolutions
Under section 338 and section 338A of the Act, shareholders meeting
the threshold requirements in those sections have the right to
require the Company (i) to give to shareholders of the Company
entitled to receive notice of the AGM, notice of a resolution which
may properly be moved and is intended to be moved at the AGM and/or
(ii) to include in the business to be dealt with at the AGM any
matter (other than a proposed resolution) which may be properly
included in the business. A resolution may properly be moved or a
matter may properly be included in the business of the AGM unless
(a) (in the case of a resolution only) it would, if passed, be
ineffective (whether by reason of inconsistency with any enactment
or the Company's constitution or otherwise), (b) it is defamatory
of any person, or (c) it is frivolous or vexatious. Such a request
may be in hard copy form or in electronic form, must identify the
resolution of which notice is to be given or the matter to be
included in the business of the AGM, must be authorised by the
person or persons making it, must be received by the Company not
later than six weeks before the AGM, and (in the case of a
matter to be included in the business only) must be accompanied by
a statement setting out the grounds for the request. Shareholders
may send enquiries to the Board in writing to the Group Company
Secretary and Chief Governance Officer, HSBC Holdings plc, 8 Canada
Square, London E14 5HQ, United Kingdom or by sending an email
to [email protected].
Members' power to require website publication of audit
concerns
Under section 527 of the Act, members meeting the threshold
requirements in that section may require the Company to publish on
its website a statement setting out any matter that the members
propose to raise at the AGM relating to (i) the audit of the
Company's accounts (including the Auditor's report and the conduct
of the audit) that are to be laid before the AGM, or (ii) any
circumstance connected with an Auditor of the Company ceasing to
hold office since the previous meeting at which annual accounts and
reports were laid. The Company may not require the members
requesting any such website publication to pay its expenses in
complying with sections 527 or 528 of the Act. Where the Company is
required to place a statement on a website under section 527 of the
Act, it must forward the statement to the Company's Auditor no
later than the time when it makes the statement available on the
website. The business which may be dealt with at the AGM includes
any statement that the Company has been required under section 527
of the Act to publish on its website.
If you have general queries about your shareholding, please contact
the relevant registrar at the address shown on page
31.
Webcast
The AGM will be webcast live at www.hsbc.com/agmwebcast and a
recording will be available for viewing until Monday, 28 June 2021.
This is a view only service and does not allow shareholders to
participate in the AGM electronically. Shareholders wishing to
participate electronically are recommended to view the webcast via
the Lumi AGM website where you can also vote and ask questions.
Details on how to join are set out on pages 29 to 30 and Appendix 7
on page 47.
Asking questions related to the business of the AGM
You have the right to ask questions in relation to the business of
the AGM but no answer need be given if (a) to do so would interfere
unduly with the preparation for the AGM or involve the disclosure
of confidential information, (b) the answer has already been given
on a website in the form of an answer to a question, or (c) it is
undesirable in the interests of the Company or the good order of
the AGM that the question be answered.
If you have any questions relating to the business of the AGM that
you would like to be addressed, please send an email to
[email protected] referencing your Shareholder
Reference Number and we will endeavour to answer any questions
raised. We will consider all questions received and, if appropriate
and relating to the business of the AGM, give an answer at the AGM,
provide a written response or publish answers on the Company's
website at www.hsbc.com/agm.
Any questions submitted that are not relevant to the business of
the AGM will be forwarded for the attention of a relevant executive
or the registrar, as appropriate. These might include matters
relating to a shareholder's bank account or affairs which are
unlikely to be relevant to the business of the AGM.
Submitting a question in advance of the AGM does not affect your
rights as a shareholder to attend and speak at the AGM.
Shareholders attending the AGM electronically may submit questions
in writing via the Lumi AGM website or may ask questions by
telephone by following the instructions set out in
the "Electronic
attendance at the 2021 Annual General Meeting" section on page
30.
Electronic attendance at the 2021 Annual General
Meeting
You may attend the AGM electronically by accessing the Lumi AGM
website at https://web.lumiagm.com.
Accessing the AGM website
Lumi AGM can be accessed online using most well-known internet
browsers such as Internet Explorer (not compatible with versions 10
and below), Chrome, Firefox and Safari on a PC, laptop or
internet-enabled device such as a tablet or smartphone. If you wish
to access the AGM using this method, please go
to https://web.lumiagm.com on
the day.
Logging in
On accessing Lumi AGM, you will be asked to enter the Meeting
ID 126-225-642.
You will then be prompted to enter your Shareholder Reference
Number and Personal Identification Number. These can be found
printed on your form of proxy or
will have been sent to you by email if you have registered an email
address to receive electronic communications. For queries on your
Shareholder Reference Number and/or Personal Identification Number
please contact the Company's registrar using the details in the
"General information" section on page 31.
You can access the Lumi AGM website from 2.00pm London time (9.00pm
Hong Kong time) on Thursday, 27 May 2021. However, please note that
your ability to vote will not be enabled until the Chairman of the
AGM formally declares the poll open, which will take place during
the AGM.
A User Guide on how to join the AGM via the Lumi AGM website is set
out in Appendix 7 on page 47.
Duly appointed proxies and corporate representatives attending
electronically
If your investment is not held in your name on the Principal
Register or the Branch Registers (for example, it is held in a
broker account or by a custodian or nominee), it will be necessary
for you to be appointed as a proxy or corporate representative to
attend the meeting electronically. You should therefore contact the
person through which your investment is held in order to arrange
for you to be appointed as a proxy or corporate representative.
Once you have been validly appointed as a proxy or corporate
representative, you will need to contact the Company's registrar
before 11.00am London time (6.00pm Hong Kong time) on Wednesday, 26
May 2021 to arrange for you to be sent a Unique Username and
Personal Identification Number to access the Lumi AGM website. The
Unique Username can be entered in place of the Shareholder
Reference Number. Specific instructions are set out below for
non-registered shareholders in Hong Kong and for holders of
American Depositary Shares.
It is recommended that the Company's registrar is contacted as
early as possible. For corporate representatives, in relation to
shares held on the UK Principal Register or the Bermuda Branch
Register, email a scanned copy of your letter of representation to
[email protected] or telephone +44 (0)
870 702 0137. In relation to shares held on the Hong Kong Branch
Register, email a scanned copy of your letter of representation to
[email protected] or telephone +852 2862 8646. For
proxy appointments, you should contact the Company's registrar to
provide your email address and details of the person through which
your investment is held. For both proxies and corporate
representatives, your Unique Username and Personal Identification
Number will be sent to you by email 24 hours prior to the
meeting.
Hong Kong non-registered shareholders
Non-registered shareholders whose shares are held in the Central
Clearing and Settlement System in Hong Kong have the option to
attend and participate at the AGM electronically. They should
liaise with their banks, brokers, custodians or nominees through
which their shares are held (together, the "Intermediary") and
provide their e-mail address to their Intermediary. The
Intermediary should register the details with HKSCC Nominees
Limited and arrange for details regarding the AGM arrangements,
including login details to access the Lumi AGM website, to be sent
by the Company's Hong Kong registrar to the e-mail addresses
provided by the non-registered shareholders. It is recommended that
instructions are sent to the Intermediary by the non-registered
shareholder as early as possible to allow time for the instructions
to be processed.
American Depositary Shares ("ADSs")
If you are a registered ADS holder (i.e. you hold your ADSs through
Computershare US, the transfer agent of the Depositary, The Bank of
New York Mellon), you will need to register in advance to attend
and participate at the AGM electronically. Please follow the
instructions on the notice that you received with your voting
instruction card.
Non-registered ADS holders: If you hold your shares through an
intermediary, such as a bank or broker, and wish to attend and
participate at the AGM electronically, you must register in advance
with Computershare US. You must submit proof of your proxy power
(legal proxy) reflecting your ADS holdings along with your name and
email address to Computershare US at [email protected] or
write to Computershare US, HSBC Holdings plc Legal Proxy, P.O. Box
43001 Providence, RI 02940-3001, labelled as "Legal Proxy", and be
received no later than 5.00pm New York time, on Wednesday, 19
May, 2021 (Virtual Meeting Pre Registration and voting cut-off
Date). The details regarding the AGM arrangements, including login
details to access the Lumi AGM website, will be sent by
Computershare US to the e-mail address provided by the ADS
holder.
By providing the information required to register in advance to
attend and participate at the AGM electronically, you confirm that
you consent to the provision of such information, including any
personal data contained therein, to The Bank of New York Mellon and
Computershare US and to the further transfer by them of that
information and personal data (if applicable) to other agents of
the Company for the purpose of facilitating your attendance and
participation at the AGM electronically.
Electronic voting
Voting on all resolutions will be enabled at the AGM once the
Chairman of the AGM formally declares the poll open. Shareholders
may, at any time while the poll is open, vote electronically on any
or all of the resolutions in the Notice. Resolutions will not be
proposed individually.
Once
the poll is open, the list of resolutions being put to the AGM will
appear on the Lumi AGM facility. The voting options available will
appear when you click on the voting icon. Select the option that
corresponds with how you wish to vote on each resolution: "FOR",
"AGAINST" or "WITHHELD". Once you have selected your choice, the
option will change colour and a confirmation message will appear to
indicate your vote has been cast and received - there is no submit
button.
If you
make a mistake or wish to change your vote, simply re-select the
correct voting option. If you wish to "cancel" your vote, select
the "cancel" button. You will be able to change or cancel your vote
at any time whilst the poll remains open and before the Chairman of
the AGM announces its closure.
An
active internet connection is required in order to successfully
cast your vote when the Chairman of the AGM commences polling on
the resolutions. It is the user's own responsibility to ensure that
they have a sufficient internet connection.
Asking questions via Lumi
Shareholders
attending electronically may ask questions via the Lumi AGM website
by typing and submitting their question in writing. To ask a
question via the Lumi AGM website, you should select the messaging
icon from within the navigation bar to open the chat box and type
your question at the bottom of the screen. Once finished, press the
'send' icon to the right of the message box to submit your
question.
Questions sent via the chat box on the Lumi AGM website will be
moderated before being sent to the Chairman of the AGM, in line
with the approach outlined in the "Asking questions related to the
business of the AGM" section on page 28.
An
active internet connection is required in order to allow you to
submit questions via the Lumi AGM website. It is the user's own
responsibility to ensure that they have a sufficient internet
connection.
Asking questions via the
telephone
To be able to speak at the AGM, shareholders will require the
telephone number and Conference ID which will only be accessible
once you have logged into the Lumi AGM website and completed the
registration process. The Lumi AGM website will be accessible from
2.00pm London time (9.00pm Hong Kong time) on Thursday, 27 May 2021
for telephone registration purposes. Local telephone calls will not
be charged.
Once connected you will receive further instructions on how to ask
a question. Once your call has been put through to the meeting you
will then be able to ask your question to the meeting. Questions
asked on the telephone will be answered in line with the approach
outlined in the "Asking questions related to the business of the
AGM" section on page 28.
If you join the telephone call to ask a question but are also
listening to the webcast of the AGM, please ensure the webcast is
muted, so that there is no interference between the two when
speaking.
We cannot guarantee that all shareholders that wish to ask a
question by telephone will be able to do so. If you do not think
that your question has been answered during the AGM or by other
means outside of the meeting, please send an email to
[email protected] as outlined in the "Asking questions
related to the business of the AGM" section on page
28.
General information
Company's registrar
For general enquiries, requests for copies of corporate
communications, or a Chinese translation of this Notice and any
future documents, please contact:
●
Computershare Investor Services PLC, The Pavilions, Bridgwater
Road, Bristol, BS99 6ZZ, United Kingdom (email via website:
www.investorcentre.co.uk/contactus);
●
Computershare Hong Kong Investor Services Limited, Rooms
1712-1716, 17th Floor, Hopewell Centre, 183 Queen's
Road East, Hong Kong SAR (email: [email protected]);
or
●
Investor Relations Team, HSBC Bank Bermuda Limited, 37 Front
Street, Hamilton HM 11, Bermuda (email:
[email protected]).
Holders of American Depositary Shares may obtain copies of this
document by calling +1 800 555 2470 or by writing to Proxy Services
Corporation (BNY Mellon ADR Team), 10 Drew Court - Suite #3,
Ronkonkoma, NY 11779, USA.
Information available on the website
A copy of this Notice, and other information required by section
311A of the Act, can be found on the Company's website at
www.hsbc.com/agm.
Receiving corporate communications
Shareholders may at any time choose to receive corporate
communications in printed form or to receive email notification of
their availability on the Company's website. To receive future
notifications of the availability of corporate communications on
the Company's website by email, or to revoke or amend an
instruction to receive such notifications by email, go to
www.hsbc.com/ecomms.
If you received a notification of the availability of this document
on the Company's website and for any reason have difficulty in
receiving or gaining access to the document, or you would like to
receive a printed copy of it, or if you would like to receive
future corporate communications in printed form, please write or
send an email (quoting your Shareholder Reference Number) to the
Company's registrar at the relevant address set out above. Printed
copies will be provided without charge.
Further copies of this document and future documents may also be
obtained by contacting the Company's registrar. You may amend your
election to receive corporate communications in English or Chinese
by contacting the registrar at the relevant address set out
above.
Documents available for inspection
Copies of the terms of appointment for the non-executive Directors
and Group Chairman and the service contracts of the executive
Directors are available for inspection through the Group Company
Secretary and Chief Governance Officer at the Company's registered
office (upon
prior appointment only and subject to the UK Government's
coronavirus restrictions at the appropriate time) at 8 Canada
Square, London E14 5HQ, United Kingdom and at 1 Queen's Road
Central, Hong Kong SAR during usual business hours on any business
day from the date of this Notice until the date of the AGM and at
the place and (upon prior appointment only and subject to the UK
Government's Covid-19 restrictions at the time) on the date of the
AGM from at least 15 minutes before the AGM begins until the
conclusion of the AGM.
Information set out in this Notice
Shareholders are advised that any telephone number, website or
email address set out in this Notice, the form of proxy or
accompanying documents should not be used for the purposes of
serving information on the Company (including the service of
documents or information relating to the proceedings at the AGM)
unless otherwise stated.
This document, for which the Directors of the Company collectively
and individually accept full responsibility, includes particulars
given in compliance with the Rules Governing the Listing of
Securities on The Stock Exchange of Hong Kong Limited for the
purpose of giving information with regard to the Company. The
Directors, having made all reasonable enquiries, confirm that to
the best of their knowledge and belief the information contained in
this document is accurate and complete in all material aspects and
not misleading or deceptive, and there are no other matters the
omission of which would make any statement herein or this document
misleading.
In the event of a conflict between any translation and the English
text hereof, the English text will prevail.
Directors' interests in the ordinary shares and debentures of
HSBC
Details of the interests in the ordinary shares and debentures of
HSBC of Directors who are standing for election or re-election are
set out in Appendix 6.
Appendix 1
Questions and Answers on Contingent Convertible Securities
("CCSs")
What are CCSs?
CCSs are debt securities that benefit from a particular regulatory
capital treatment under European Union and United Kingdom
legislation. CCSs will be converted or exchanged into ordinary
shares if a defined trigger event occurs. The terms of HSBC's
existing CCSs have received regulatory approval from the Prudential
Regulation Authority ("PRA").
As a banking group, HSBC must meet minimum regulatory capital
requirements in the countries in which it operates. These include
compliance with European Union and United Kingdom legislation under
which banks and bank holding companies are required to maintain
Tier 1 Capital of at least 6 per cent of their risk weighted
assets. Of that, 1.5 per cent of risk weighted assets may be in the
form of Additional Tier 1 capital. In addition, HSBC is required to
satisfy an additional capital requirement defined by the PRA by
maintaining an additional 0.6 per
cent of risk weighted assets in the form of Additional Tier 1
capital.
In order to qualify as Additional Tier 1 capital, a security must
contain certain features designed to increase the resilience of the
issuing bank should the bank's financial condition deteriorate
materially. The CCSs would qualify as Additional Tier 1 capital on
the basis that, on the occurrence of a defined trigger event, they
would be mandatorily converted into or exchanged for ordinary
shares of HSBC. The conversion or exchange would have the effect of
increasing the issuer's Common Equity Tier 1 capital
ratio.
What are the trigger events for the CCSs and what will happen if a
trigger event occurs?
Should HSBC's Common Equity Tier 1 capital ratio fall below the
defined capital trigger (the "Trigger Event"), the CCSs would be
converted into or exchanged for new ordinary shares in HSBC on
their prescribed terms. The defined capital trigger will be
specified in the terms of the CCSs when they are issued. HSBC's
existing CCSs contain a Common Equity Tier 1 capital trigger of
7.0 per
cent on a non-transitional (excluding IFRS 9 transitional
arrangements) basis (the "non-transitional CET1 ratio") which has
been approved by the PRA. It is HSBC's current expectation that
future CCSs issued by the HSBC Group would contain the same capital
trigger subject to approval by the PRA.
What steps can HSBC take to mitigate a potential Trigger
Event?
HSBC is required by its regulators to have in place a recovery plan
in case its regulatory capital levels come under pressure.
Accordingly, if HSBC's capital ratios were to fall materially and
in any event in advance of a Trigger Event, HSBC would seek to
commence recovery actions in order to restore the HSBC Group's
regulatory capital ratios and reduce the likelihood of a Trigger
Event occurring. HSBC's recovery plan includes a number of actions
it may take, including reducing distributions, reducing risk
weighted assets or selling or liquidating assets.
HSBC's non-transitional CET1 ratio was 15.7 per cent as at 31
December 2020. HSBC remains a strongly capitalised bank, able to
support both organic growth and dividend returns to shareholders.
HSBC remains well placed to meet expected future capital
requirements, and will continue to take actions to remain in that
position, taking into account the evolution of the regulatory
environment. Given its current capital position and the planned
recovery actions it would take if a Trigger Event was deemed likely
to arise, HSBC considers the circumstances in which a Trigger Event
might occur in practice to be remote.
The CCSs which HSBC has issued to date have included a term which
provides that on the occurrence of a Trigger Event, the Directors
may elect, at their discretion, to give shareholders the
opportunity to purchase ordinary shares issued on conversion or
exchange of any CCSs on a pro rata basis, where practicable and
subject to applicable laws and regulations. This would be at the
same price as the holders of the CCSs would have acquired the
ordinary shares. Where permitted by law and regulation to do so,
the Company will continue to issue future CCSs including terms
which provide the Company with the discretion to offer the
opportunity to shareholders to purchase ordinary shares issued on
conversion or exchange of CCSs.
Will CCSs be redeemable?
There is no general right of redemption for the holders of the
CCSs. It is expected that HSBC would have the right to redeem the
CCSs after a minimum period of five years and in certain other
specified circumstances, but any redemption features would need to
be approved by the PRA prior to issue and any redemption would be
subject to PRA approval at the time of redemption.
Will all CCSs be in the form of Additional Tier 1
capital?
Yes. The Company has no intention to issue capital securities
pursuant to Resolutions 12 and 13 except for securities which
constitute Additional Tier 1 capital under applicable banking
regulations.
Why is HSBC seeking authority to issue CCSs?
Issuing CCSs gives HSBC greater flexibility to manage its capital
in the most efficient and economical way. It is expected that
Additional Tier 1 capital will be a cheaper form of capital than
issuing and maintaining Common Equity Tier 1 capital (e.g. ordinary
shares) to satisfy the Tier 1 Capital requirement and (provided the
Trigger Event does not occur) non-dilutive to existing
shareholders. This should improve the returns available to existing
shareholders whilst maintaining HSBC's capital strength, in line
with prevailing banking regulations.
The authorities in Resolutions 12 and 13 are required because the
Directors are only permitted to issue up to 10 per cent of the
issued ordinary share capital for cash on a non-pre-emptive basis
under the general authorisation in Resolutions 7, 8 and 9. Given
the administrative burden both in cost and time for a company the
size of HSBC to obtain these types of authorities, the Directors do
not consider it practical or in the interests of shareholders to
seek a new authority each time an issue of CCSs is proposed. It is
important to have the flexibility to react quickly to market and
regulatory demand. Furthermore, in order to obtain PRA approval to
the issuance of CCSs, all necessary allotment authorities need to
be in place, so the process of seeking a new authority in addition
to PRA approval would lead to unacceptable delay.
At what price will the CCSs be issued and how will the conversion
price be fixed?
As the CCSs are debt securities, they will be issued at or close to
their face value in a manner typical for debt securities. The terms
and conditions for the CCSs will specify a fixed conversion price
or a mechanism for setting a conversion price (which could include
a variable conversion price determined by reference to the
prevailing market price on conversion subject to a minimum "floor"
price) which will determine how many ordinary shares are issued on
conversion or exchange of the CCSs if a Trigger Event occurred. In
respect of any CCSs issued (or shares issued on conversion or
exchange of CCSs) under the authorities in Resolutions 12 and 13,
the conversion price or (as applicable) the minimum "floor"
conversion price will be agreed in advance with the PRA and will be
determined immediately prior to the issuance of such CCSs by taking
into account the following factors: (i) the lowest trading price of
HSBC's ordinary shares over the last 10 years; and (ii) market
expectations as to the conversion price, taking into account the
conversion price set for our previous Additional Tier 1 instruments
(£2.70) and the conversion prices for similar Additional Tier
1 instruments issued by our peers. The conversion price will be
subject to typical adjustments for securities of this
type.
How have you calculated the size of the authorities you are
seeking?
The size of the authorities reflected in Resolutions 12 and 13 have
been determined to provide flexibility to enable HSBC to optimise
its capital structure in light of the regulatory capital
requirements arising from the European Union and United Kingdom
legislation and PRA requirements. The authorities sought are set at
a level to provide full flexibility to the Directors to manage
HSBC's capital structure efficiently and are based on the
Directors' assessment of the appropriate amount required to enable
HSBC to hold the maximum amount of Additional Tier 1 capital taking
into account its expected risk weighted asset figures and applying
the conversion price referred to above. For this reason, the
resolutions give the Directors' authority to set the specific terms
of the CCSs after considering market practice and requirements at
the time.
Waiver granted by the Hong Kong Stock Exchange
The Hong Kong Stock Exchange has granted the Company a waiver from
strict compliance with the requirements of Rule 13.36(1) of the
Rules Governing the Listing of Securities on The Stock Exchange of
Hong Kong Limited pursuant to which the Company is permitted to
seek (and, if approved, to utilise) the authority under Resolutions
12 and 13 to issue CCSs (and to allot ordinary shares into which
they may be converted or exchanged) in excess of the limit of the
general mandate of 20 per cent of the Company's issued share
capital (the "Mandate"). The waiver has been granted on terms that
permit the Mandate, if approved, to continue in force
until:
(i)
the conclusion of the first annual general meeting of the Company
following the date on which the Mandate is approved (or the close
of business on 30 June 2022, whichever is the earlier) at which
time the Mandate shall lapse unless it is renewed, either
unconditionally or subject to conditions; or
(ii)
such time as it is revoked or varied by ordinary resolution of the
shareholders in general meeting.
Appendix 2
Purchase of Ordinary Shares by the Company
Set out below is information concerning the proposed general
mandate for the purchase of shares by the Company (Resolution 11),
which incorporates the Explanatory Statement required to be sent to
shareholders in accordance with the Rules Governing the Listing of
Securities on The Stock Exchange of Hong Kong Limited ("Hong Kong
Listing Rules") as well as details of the conditional waiver
granted by the Hong Kong Stock Exchange to enable the Company to
hold in treasury any shares it may repurchase.
(a)
It is proposed that the Company be given authority to purchase up
to 2,042,279,925 ordinary shares of US$0.50 each (which represent
10 per cent of the ordinary shares in issue on 10 March 2021 being
the latest practicable date prior to the printing of this
document). Purchases of shares would be at prices not below the
nominal value of each ordinary share, US$0.50 or the equivalent in
the relevant currency in which the purchase is effected, and at not
more than 105 per cent of the average of the middle market
quotations for the ordinary shares on the London Stock Exchange for
the five dealing days before the relevant purchase or 105 per cent
of the average of the closing prices of the ordinary shares on the
Hong Kong Stock Exchange for the five dealing days before the
relevant purchase, whichever is lower.
(b)
The Directors believe that it is in the best interests of the
Company and its shareholders to have a general authority from
shareholders to enable the Company to purchase ordinary shares in
the market and to give power to the Directors to exercise such
authority. The Directors intend that purchases of ordinary shares
should only be made if they consider that the purchase would
operate for the benefit of the Company and shareholders, taking
into account relevant factors and circumstances at that time, for
example the effect on earnings per share.
(c)
It is expected that purchases will be funded from the Company's
available cash flow or liquid resources and will, in any event, be
made out of funds legally available for the purchase in accordance
with the Articles of Association of the Company and the applicable
laws of England and Wales.
(d)
The Directors would not make purchases in circumstances where to do
so would have a material adverse effect on the capital requirements
of the Company or the liquidity levels which, in the opinion of the
Directors, are from time to time appropriate for the Company. If
the power to make purchases were to be carried out in full
(equivalent to 10 per cent of the ordinary shares in issue on 10
March 2021 being the latest practicable date prior to the printing
of this document) there might be a material adverse impact on the
capital or liquidity position of the Company (as compared with the
position disclosed in its published audited accounts for the year
ended 31 December 2020).
(e)
None of the Directors, nor, to the best of the knowledge of the
Directors having made all reasonable enquiries, any close
associates (as defined in the Hong Kong Listing Rules) of the
Directors, has a present intention, in the event that Resolution 11
is approved by shareholders, to sell any ordinary shares to the
Company. No core connected persons (as defined in the Hong Kong
Listing Rules) of the Company have notified the Company that they
have a present intention to sell shares in the Company to the
Company or have undertaken not to sell any of the shares in the
Company held by them to the Company, in the event that Resolution
11 is approved.
(f)
Under the provisions of the UK Companies Act 2006 (the "Act") the
Company is permitted, following any repurchase of ordinary shares,
to retain and hold such shares in treasury. While that Act does not
impose a limit on the number of shares that a company can hold in
treasury, UK investor protection guidelines and market practice in
the UK is to limit the extent of any share purchase authority to 10
per cent of issued share capital, exclusive of treasury shares. On
19 December 2005, the Hong Kong Stock Exchange granted a
conditional waiver to the Company to enable it to hold shares which
it may repurchase in treasury (the "2005 Waiver"). The 2005 Waiver
is subject to certain conditions, including compliance by the
Company with all applicable laws and regulations in the UK in
relation to the holding of shares in treasury. As part of the 2005
Waiver, the Company has agreed with the Hong Kong Stock Exchange a
set of modifications to the Hong Kong Listing Rules necessary to
enable the Company to hold treasury shares. The modifications also
reflect various consequential matters to deal with the fact that
the Company may hold treasury shares in the future. A full version
of the modifications is available on the Company's website,
www.hsbc.com, and the Hong Kong Stock Exchange's news website,
www.hkexnews.hk. Copies of the modifications are also available
from the Group Company Secretary and Chief Governance Officer, HSBC
Holdings plc, 8 Canada Square, London E14 5HQ, United Kingdom and
the Corporation Secretary and Regional Company Secretary
Asia-Pacific, The Hongkong and Shanghai Banking Corporation
Limited, 1 Queen's Road Central, Hong Kong SAR. In accordance with
the terms of the 2005 Waiver, the Company has confirmed to the Hong
Kong Stock Exchange that it will comply with the applicable law and
regulation in the UK in relation to the holding of any shares in
treasury and with the conditions of the 2005 Waiver in connection
with any shares which it may hold in treasury.
(g)
The Directors have undertaken to the Hong Kong Stock Exchange that,
if they exercise any power of the Company to make purchases
pursuant to Resolution 11, they will do so in accordance with the
Hong Kong Listing Rules (as modified in accordance with the terms
of the 2005 Waiver to enable the Company to hold in treasury any
shares it may repurchase) and the applicable laws of England and
Wales.
(h)
The Directors are not aware of any consequences which would arise
under any applicable Takeover Code as a result of any purchases
made by the Company pursuant to Resolution 11, if
approved.
(i)
The Company has not repurchased any shares since the 2020 Annual
General Meeting.
(j)
The highest and lowest mid-market prices at which ordinary shares
or, in the case of the New York Stock Exchange, American Depositary
Shares ("ADSs"), have traded on the Hong Kong, London, Paris, New
York and Bermuda Stock Exchanges during each of the twelve
completed months prior to the latest practicable date before
printing of this document were as follows:
Month
|
Hong
Kong
Stock Exchange
|
London
Stock Exchange
|
Euronext Paris Stock Exchange1
|
New York
Stock Exchange (ADSs2)
|
Bermuda Stock Exchange3
|
|
Lowest Highest
|
Lowest Highest
|
Lowest Highest
|
Lowest Highest
|
Lowest Highest
|
|
(HK$ (HK$)
|
(£)
|
(£)
|
(€)
|
(€)
|
(US$) (US$)
|
(BD$)
(BD$)
|
March
2020
|
43.83
|
52.83
|
4.45
|
5.20
|
5.02
|
6.01
|
28.02
|
33.78
|
5.63
|
6.68
|
April
2020
|
37.93
|
41.48
|
3.97
|
4.29
|
4.54
|
4.90
|
24.33
|
26.86
|
4.93
|
5.28
|
May
2020
|
35.68
|
40.08
|
3.70
|
4.15
|
4.15
|
4.75
|
22.98
|
25.63
|
4.63
|
5.13
|
June
2020
|
36.08
|
40.98
|
3.76
|
4.23
|
4.22
|
4.78
|
23.34
|
26.67
|
4.68
|
5.28
|
July
2020
|
34.78
|
39.28
|
3.42
|
4.09
|
3.84
|
4.54
|
22.65
|
25.64
|
4.48
|
5.03
|
August
2020
|
32.83
|
35.73
|
3.25
|
3.57
|
3.64
|
3.98
|
21.34
|
23.12
|
4.23
|
4.68
|
September
2020
|
28.23
|
33.48
|
2.83
|
3.28
|
3.15
|
3.67
|
18.11
|
21.44
|
3.58
|
4.28
|
October
2020
|
29.93
|
33.78
|
2.97
|
3.30
|
3.32
|
3.65
|
19.24
|
21.51
|
3.70
|
3.75
|
November
2020
|
32.83
|
42.38
|
3.32
|
4.05
|
3.69
|
4.51
|
21.41
|
26.89
|
4.20
|
5.25
|
December
2020
|
39.43
|
43.78
|
3.79
|
4.22
|
4.10
|
4.69
|
25.54
|
28.38
|
5.25
|
5.25
|
January
2021
|
40.18
|
44.38
|
3.79
|
4.17
|
-
|
-
|
25.74
|
28.45
|
-
|
-
|
February
2021
|
40.78
|
47.63
|
3.84
|
4.35
|
-
|
-
|
26.31
|
30.36
|
-
|
-
|
1 The
ordinary shares were delisted from Euronext Paris Stock Exchange on
22 December 2020.
2 Each
ADS represents five ordinary shares.
3 Shares
trade infrequently on the Bermuda Stock Exchange resulting in some
months having no trading data.
Appendix 3
Explanatory statement in support of Resolution 15 (climate change
resolution)
Achieving the
transition to a net zero global economy is one of the most
significant challenges, and greatest opportunities, of our time. It
is key to unlocking long-term sustainable growth, protecting the
financial system from climate risk and safeguarding society more
generally. The Board believes that HSBC is well-placed to help
accelerate this transition.
Tackling climate
change is a priority for HSBC. We have a proven track record of
leadership in sustainable finance and engagement on sustainability.
In October 2020, we set out an ambition to become a net zero bank.
Our aim is to reduce emissions in our operations and supply chain
to net zero by 2030, and to transition our provision of finance to
align with a net zero target by 2050 or sooner.
This is
a challenging goal, but one that we believe is achievable. It is
also - by necessity - ambitious. We believe no other bank of our
scale and geographic footprint, particularly in emerging markets,
has set such a significant ambition.
In
pursuing this ambition, we believe that HSBC can maximise its
positive impact by remaining engaged as a provider of responsible
banking services. Accordingly, we believe we should proactively
partner with our clients in the transition to a low carbon economy,
and enable the investment required for appropriate and enhanced
sustainable economic activity. We seek to do business with
customers who share our ambitions on climate
change.
Resolution 15 sets
out actions HSBC proposes to take in pursuing its net zero
ambition. It proposes to set a clear, science-based approach to
aligning its provision of finance1 to Paris
Agreement2 goals. It
commits the bank to publish and implement a policy to phase out
financing1 of coal-fired
power and thermal coal mining. And it requires HSBC to report on
progress on aligning its provision of finance to the goals of the
Paris Agreement and on coal related financing in annual
disclosures.
The
Board believes that a portfolio-level approach centred on enabling
transition sets a leading standard for the financial services
sector as it collectively works to tackle climate change. We will
regularly review and update our approach as the evidence develops.
We are also considering putting our climate strategy to a periodic
advisory shareholder vote and will continue to engage with our
shareholders on this.
Net zero aligned finance
Our
assessment of the current evidence is that an approach centred
around enabling a transition to a low carbon economy is the most
effective, and most practical, route to achieving the goals of the
Paris Agreement on climate change. This will require the
decarbonisation of energy supply as well as material changes to the
demand side. We have already observed a significant strategic
change among our customers in response to climate change, and
expect a further acceleration as businesses and governments
coalesce around Paris Agreement goals. These efforts are being
accelerated by advancements in low carbon technology, supportive
public policy and an increasing appreciation of the opportunities
associated with climate-aligned economic activity which we expect
in turn will see clients reduce their reliance on high carbon and
fossil fuel based business activities.
This
approach would see HSBC work with customers in all sectors to
support their transition - for example, by providing finance to
help enable our customers to transform their operations and
business models to low carbon activities, or by investing in new
technologies to help accelerate emissions reduction - thereby
facilitating a strong global economy and an inclusive and resilient
society. However, this approach would envisage situations where
HSBC reduces and ultimately ends relationships with certain clients
that do not align with Paris Agreement goals.
Our
approach to aligning finance to the goals of the Paris Agreement
seeks to assess our customers' own emission profiles and transition
plans at a customer level as the basis for evaluating the alignment
of our financing activities on a sector and portfolio level. We
intend to perform this analysis by industry sector, beginning in
2021 with Oil & Gas and Power & Utilities, and extending to
other sectors in 2022 (for example Automotive, Building Materials,
Construction). We believe this approach will allow us to identify
opportunities for constructive engagement with customers while also
helping to ensure progress on aligning our financing activities at
a sector and portfolio level with the goals of the Paris
Agreement.
We
intend to set clear, measurable short and medium term targets on a
sector by sector basis that are consistent with net zero outcomes
by 2050. In relation to short and medium term, we expect this to
mean targets for the next five to ten years. We plan to use
science-based scenarios that follow 1.5 degrees Celsius warming
pathways, and which are not overly reliant on negative emissions
technologies, to assess alignment of our financing activities. We
plan to provide further detail on this approach by the end of 2021,
starting with the Oil & Gas and Power & Utilities sectors,
and including methodology, scenarios, treatment of negative
emissions and core assumptions used.
Phasing out finance for coal-fired power
Our
current policies prohibit financing by HSBC of new coal-fired power
plant projects and new thermal coal mines or new customers
dependent on thermal coal mining. However, although thermal coal is
currently used widely as a source of power generation in many
markets, we recognise that the expansion of coal-fired power is
incompatible with the goals of the Paris Agreement. Reliance on
coal-fired power will need to reduce rapidly in order to achieve
net zero aims. Failure to do so will heighten risks posed by
climate change to society, as well as transition risk for HSBC's
own business. We also appreciate that emerging markets, in which we
have a strong presence, are significantly more reliant on coal as a
source of energy and will need more time to
transition.
We are
therefore committing to publish by the end of 2021 a policy that
will phase out financing of coal-fired power and thermal coal
mining in the European Union and Organisation for Economic
Cooperation and Development markets by 2030, and in all other
markets by 2040. The policy will provide further detail on the
phase out plan, its scope and interim targets; we will engage with
ShareAction, representatives of the group of co-filing institutions
and other stakeholders in the development of this policy. We will
also indicate our approach to engagement with customers affected by
the implementation of this policy in order to resolve potential
risks to meeting our expectations. During this process, we will
work with our customers to help them develop their individual
decarbonisation plans aligned to the Paris Agreement goals and will
expect them to make this part of their public
disclosures.
Review and disclosure
We
aim to leverage methodologies and tools consistent with best
practice for evaluating climate alignment of financing activities,
and to contribute to the continued development of such tools and
standards for the financial services industry.
We
will continue to review and update our methodology and analysis to
help ensure it is aligned with market best practice. We will report
progress on our net zero aligned finance strategy and on reducing
our exposures to coal-fired power and thermal coal mining on an
annual basis, starting with the 2021 Annual Report and Accounts
which is to be published in February 2022. We plan to use our 2020
Task Force on Climate-related Financial Disclosures ("TCFD") as our
baseline for this disclosure.
Working in partnership with stakeholders
Addressing a
challenge as complex as climate change requires collaboration.
Tackling climate change will require the transformation of sectors
and economies, with important implications for the global
workforce. The Paris Agreement is clear about the need to "take
into account the imperatives of a just transition of the workforce
and the creation of decent work and quality jobs in accordance with
nationally defined development priorities".
HSBC
seeks to work in close partnership with governments, central banks
and multilateral organisations to create the systemic conditions
for change. We also aspire to work closely with our customers,
particularly businesses, the financial services industry and our
shareholders to deliver change.
We
are actively involved with a number of initiatives and
organisations working to address climate change, including the
World Economic Forum, the Sustainable Markets Initiative and the
Institute of International Finance. In 2020, we established a
Climate Advisory Panel, made up of experts from science, industry
and academia, to help guide and shape our approach. We look to
strengthen and deepen this engagement as we pursue our net zero
ambition.
Engagement with shareholders
Resolution 15 and
this statement in support of the Resolution have been discussed and
agreed with ShareAction and certain of the co-filers who had
originally proposed an alternative resolution on climate change to
be put to the AGM (the "Requisitioned Climate
Resolution").
After
constructive and extensive dialogue and engagement with
ShareAction, certain of the co-filers and other shareholders, we
are pleased that ShareAction, on behalf of the co-filers of the
Requisitioned Climate Resolution, has withdrawn the request to put
the Requisitioned Climate Resolution to the AGM. ShareAction and
certain of the co-filers of the Requisitioned Climate Resolution
recommend that shareholders vote in favour of Resolution 15. The
Board also recommends shareholders vote in favour of the Resolution
for the reasons set out in this Appendix.
1 For
the purposes of the resolution, "finance" and "financing" means
providing project finance or direct lending to, or underwriting
capital markets transactions for, corporate clients of our Global
Banking and Commercial Banking businesses.
Corporate
clients, also referenced as customers, will remain in scope of this
resolution even in the event of organisational changes of the
underlying lines of business.
2 As set out by Article 2.1(a) and
Article 4.1 of the Paris Agreement: https://unfccc.int/files/essential_background/convention/application/pdf/english_paris_agreement.pdf
Appendix 4
Explanatory statement supplied by the Midland Clawback Campaign
Shareholder group in support of the requisitioned Resolution
16
●
STATE
DEDUCTION (the recognised and correct term is Clawback) is the
practice of withholding part of an occupational pension when a
person reaches state pension age. Within HSBC, the manner in which
this is applied, is hugely disproportionate, unfair, and
significantly impacts the lowest paid, mainly
women.
●
Clawback
became legislation in 1948, but was not introduced by Midland Bank
until 1975. By then, other companies who had adopted this practice
at the outset, were seeking to exit.
●
The Civil Service identified an imbalance and
chose to abolish the practice. Later, follow up by
the media, exposed and
reported on several Blue-Chip companies changing their rules, or
abolishing the practice, including BP, Nestle, Shell and Barclays
Bank.
●
The
bank continues to claim that Clawback is a customary practice but
is unable to provide any evidence to support this assertion and
unfortunately nothing exists in the public domain. They refer to a
small sampling, completed by the Pension Administrators, but
decline to provide details of the data that would support their
claim.
●
The House of
Commons Library briefing
quotes: "A 2005 Annual Survey found that the number of open schemes
imposing a State Pension deduction was declining:
Overall 70% of open DB/hybrid schemes, covering 61% of
members, impose no deduction
from their occupational pension on account of the basic State
Pension (BSP)."
(Page 8 of Briefing Paper Number CBP-01121 dated
19th February
2020 entitled Pension integration (or
'clawback')
●
The
bank is unable to explain why they created new terminology (State
Deduction) for this process and in so doing effectively confused /
misled the majority of approximately 52,000 impacted
staff.
●
The
bank has declined to explain how they arrived at the formula they
have adopted to calculate and implement the Clawback. The
Equalities and Human Rights Commission (EHRC) have acknowledged
there is an inequality.
●
Whilst
EHRC advised the practice is legal and their current caseload
prohibits them acting, they have referred the campaign to the
Government Equalities Office (GEO) which is ongoing.
●
Whilst
technically legal, speeches within Parliament describe the practice
of clawback as
"… morally offensive
because it is unfair".
●
The
cost of a company pension is driven by salary and then pension
paid. HSBC Clawback is not linked to salary but to State Pension.
In practice, this means that if a top manager and a junior staff
member work an equal number of years, an identical deduction is
made to their company pension. This is an inequality and is hugely
disproportionate. Past employment practices now demonstrate that
many more women are adversely affected than men, plunging many into
financial distress.
●
Pension
data gathered from impacted staff indicates
o 92%
of staff losing more than 25% in clawback are
women.
o 88%
of women surveyed lose more than 15% in
clawback.
●
66%
of men surveyed lose less than 10% in clawback.
●
The
bank incorrectly claim that they cannot change the Midland Section
Defined Benefit Scheme (DBS) without changing all the schemes
within the Bank's UK pension schemes. Of the 23 sections of the DBS
only the Midland Section suffers clawback.
●
An
All-Party Parliamentary Group (APPG) has been formed with the aim
of challenging HSBC to remove Clawback from its pension scheme.
Formalities for completing the relaunch of this APPG were delayed
due to the Coronavirus pandemic, but it is now active again and
will be giving this campaign increased focus and support in
2021.
●
The
bank has previously cancelled all appointments arranged with the
Midland Clawback Campaign committee and now refuse to participate
in any communication
●
The
campaign has been successful in obtaining media exposure in the
past, which represents reputational risk for the bank. With the
relaunch of the APPG, this is likely to increase in the future if a
meaningful dialogue is not forthcoming.
In Summary
The bank has failed to acknowledge that the pensioners and current
staff members of the scheme are also customers. As such, they
deserve to be treated fairly and in a similar manner to the
customers that have received retrospective refunds, which are
deemed to be harsh by today's standards. Shareholders should
pass this Resolution and thereby instruct the directors to accept
the moral arguments and discuss options to remedy this inequality
and the unfair impact of Clawback.
Appendix 5
The Board's response to Resolution 16 requisitioned by the Midland
Clawback Campaign Shareholder group
Your Directors consider that Resolution 16 is not in the best
interests of the Company and its shareholders as a whole and
unanimously recommend that you vote against Resolution 16 for the
reasons set out below:
HSBC's position on the removal of the State Deduction feature has
been consistent; that it would constitute a retrospective change
that would benefit a particular group of members and would be
unfair to other HSBC Bank (UK) Pension Scheme ("Scheme") members.
It would increase the risk of grievances being raised from other
pension scheme members both in the UK and globally and would set a
precedent for further challenges to pre-existing valid terms and
conditions that could lead to significant unplanned and unintended
costs.
HSBC has been engaged in addressing questions on the State
Deduction feature over several years and will continue to engage
with authorities who request information. HSBC is willing to
continue to discuss its position with the group of members of the
Post 1974 Midland Section of the Scheme (the "Campaign Group") and
respond to queries and requests for information.
The
term State Deduction is a common term used to describe the
integration of private and state benefits and was clearly and
consistently communicated to members.
HSBC recently commissioned a market review of the State Deduction
feature in the third quarter of 2020. The review demonstrated that
integration of private sector pension schemes with state benefits,
to target an overall level of benefit, remains an accepted and
common aspect of UK pensions practice.
The use of State Deduction as a mechanism of integrating Scheme and
state benefits is recognised by current legislation and continues
to be maintained by a significant number of schemes. The Equality
and Human Rights Commission (the "EHRC") has confirmed that the use
of State Deduction is lawful.
The Campaign Group gives a subjective view of the information
contained in the House of Commons Briefing paper and of the broader
market practice for pension schemes similar to the HSBC Scheme. The
Briefing Paper does not confirm as suggested the conclusions set
out in the Campaign Group's resolution.
The Campaign Group has referenced the refunding of charges
previously taken by the Collections and Recoveries Team. In
circumstances where we are found to not be fully compliant with our
regulatory obligations we would take action. However, we believe
that by continuing to apply the State Deduction we are acting
correctly, particularly when consideration is given to both the
broader HSBC pensioner and employee population, many of whom do not
receive a final salary pension, and the broader wider market
practice for pension schemes of this type.
This position is taken having consulted with the Trustees of the
Scheme and having taken external advice.
Background:
What is the Post 1974 Midland Section?
All employees who joined HSBC Bank plc (or Midland Bank plc at the
time) after 31 December 1974 and before 1 July 1996 were eligible
to join the Post 1974 Midland Section (the "Post 1974 Section") of
the Scheme. The Post 1974 Section provides final salary benefits,
and was non-contributory until 2009. It was designed to ensure that
members received an overall pension of broadly two-thirds of final
salary on retirement (provided they worked for the company for 40
years).
The Post 1974 Section consists of approximately 52,000 members. The
State Deduction feature applies to all members of this section of
the Scheme.
The Post 1974 Section has been closed to new members since July
1996. New joiners of the HSBC Group in the UK are now enrolled into
the defined contribution section of the Scheme, which does not
provide a guaranteed income on retirement.
What is the State Deduction?
The State Deduction is one of a number of recognised mechanisms
used to facilitate the integration of Scheme and state benefits and
has been a feature of the Post 1974 Section since its introduction
in 1975. The State Deduction takes account of the fact that
employees would usually receive a pension from the UK Government at
their State Pension Age, and reduces the amount paid by the Scheme
at State Pension Age. The aim was that members would continue to
receive an overall pension level throughout retirement (subject to
minimum employment terms and pension increases). This form of
integration with the State system was a common feature in final
salary schemes introduced at that time.
What is "Clawback"?
Clawback is a term used by the Campaign Group to refer to the State
Deduction.
"Clawback" is not an accurate description of the State Deduction.
HSBC agreed to provide pension benefits to members and fund the
scheme on the basis that the State Deduction will be
applied. No aspect of members' benefits, or amounts
paid to members, are or will be clawed back, nor are they
"withheld".
HSBC's position:
When the Scheme was introduced, it required no contribution from
members to secure an overall pension of up to two-thirds of final
salary on retirement.
When joining HSBC, employees were automatically enrolled in the
Scheme and the Scheme literature expressly highlighted that the
integration of state pension would be part of their pension
calculation.
Features akin to the State Deduction were commonplace in other
pensions as well as other sections of the Scheme.
When the State Deduction was introduced, many schemes integrated
state and scheme benefits in various ways to target overall levels
of benefit.
Recent survey results of 140 pension schemes, commissioned by HSBC,
show that integration of state and private sector scheme pension
benefits remains very common, with almost two thirds of
participants having some form of state pension integration. This
proportion increases further when comparing financial services
participants (71%) and even greater when comparing large financial
services sector schemes of similar size to the HSBC scheme (88%).
This is more apparent when the distinction between public and
private sector schemes is made and when schemes are considered by
reference to industry sector, being financial services, and
size.
It is not correct to say that the integration of the state pension
with the Scheme does not occur in other sections, but the Post 1974
Section is the only section of the Scheme where state pension
integration is applied in this way. Included within other sections
of the Scheme are integration methods that provide an additional
payment until an individual reaches State Retirement Age or
accounting for the State Pension amount in the pensionable pay
definition used to determine an individual's pension.
The State Deduction is common terminology for similar integration
features amongst other schemes, and was clearly and consistently
communicated to members.
HSBC has commissioned a thorough review of how the State Deduction
was communicated to members dating back to its introduction in 1975
to determine if HSBC made the Post 1974 Section's members
sufficiently aware of the feature. HSBC's legal advisers have
determined that the State Deduction was clearly and consistently
communicated within Scheme communications. The Scheme Trustee, who
is separate to and independent of HSBC, also carried out an
extensive review of Scheme documents and correspondence from its
introduction in 1975 to date and concluded that the deduction was
communicated in a transparent manner.
The EHRC has confirmed that the use of the State Deduction is
lawful.
HSBC was contacted by the EHRC in late 2018 on an informal basis
concerning the State Deduction. In the course of that
correspondence HSBC provided a detailed analysis of the background,
rationale and legal basis on which the State Deduction operates.
This included advice from leading Counsel. Following review of the
information provided, the EHRC has now confirmed that the use of
the State Deduction is lawful.
The State Deduction forms part of the pension benefit calculation
for all members of the Post 1974 Section. It does not put members
who share a particular characteristic, such as gender, at a
disadvantage. The extent to which the State Deduction forms a
greater or lesser proportion of an individual's pension depends on
the size of their total pension, which will also depend on a number
of factors. Members with a lower final pensionable salary will
receive a lower pension than those on a higher final pensionable
salary (assuming the same period of service). In the same way if a
member retires early, or takes a lump sum, then the residual
pension will also be lower resulting in the State Deduction forming
a higher proportion of overall pension.
Formula used by HSBC to calculate the State Deduction.
HSBC has previously supplied the Campaign Group with details and
working examples of how the formula to calculate the State
Deduction is adopted. HSBC's methodology is aligned to other
schemes that have a similar State Deduction feature.
The House of Commons Briefing Paper on 'Pension Integration or
Clawback' (the "Briefing Paper"), which is cited by the Campaign
Group, does not support the Campaign Group's
claims.
The Campaign Group gives a subjective view of the information
provided by the Briefing Paper and of the broader market practice
for pension schemes similar to the HSBC Scheme. The Briefing Paper
does not confirm as suggested the conclusions set out in the
Campaign Group's resolution.
The purpose of the Briefing Paper is to provide historical context
and looks at the background and campaign to change the rules in the
early 2000s. It therefore provides a largely factual account of the
issue and includes reference to statements made by MPs and
Ministers both in favour and against continued use of the State
Deduction.
The Briefing Paper provides information from which it can be
concluded that:
(i)
while the origins of integration of state and occupational pensions
arise from compulsory national insurance being introduced in 1948,
much more recent legislation - some of which is referred to in the
Briefing Paper - means that the legislation which governs it
remains current. Rather than being an outdated anomaly,
current legislation and case law means that integration meets
ongoing requirements for equality and fairness. This has now most
recently been considered and confirmed by the EHRC's conclusion
that the use of the State Deduction is lawful;
(ii)
the supporting statement fails to make the distinction between
public and private sector schemes although the two are
distinguished in the Briefing Paper. It would be misleading to
presume that public and private sector schemes are interchangeable
or comparable in terms of policy and benefit design. The move away
from integration in the public sector does not mean that
integration has seen an equivalent decline in private sector
schemes; and
(iii)
the Briefing Paper does not present any current data that shows
that private sector occupational schemes comparable to the Scheme
are out of step or unusual in integrating its benefits with state
benefits.
Removal of the State Deduction would be unfair to other Scheme
members.
Removal of the State Deduction would constitute a retrospective
change which would benefit a particular group of members and be
unfair to other Scheme members. It would increase the risk of
grievances being raised from other pension scheme members both in
the UK and globally and would set a precedent for further
challenges to valid terms and conditions that could lead to
significant unplanned and unintended costs.
As mentioned above, it is not true to say that the integration of
the state pension with the Scheme does not occur in other sections,
but the Post 1974 Section is the only section of the Scheme where
state pension integration is applied in this
way.
The results of our most recent survey show that very few schemes
have retrospectively amended any elements of integration with the
State Pension, beyond dealing with changes to State Pension Age or
the structure of the State Pensions. In particular, it showed
that no schemes in the survey with a similar feature to the State
Deduction have removed this retrospectively on the grounds of it
being considered unfair or inappropriate.
HSBC's history of paying compensation where appropriate is not
linked to the Campaign Group's claims.
The Campaign Group have referenced the refunding of charges
previously taken by the Collections and Recoveries Team. In
circumstances where we are found to not be fully compliant with our
regulatory obligations we would take action. However, as outlined
above, we believe that by continuing to apply the State Deduction
we are acting correctly, particularly when consideration is given
to both the broader HSBC pensioner and employee population, many of
whom do not receive a final salary pension, and the broader wider
market practice for pension schemes of this type.
HSBC has been engaged in addressing the issue of the State
Deduction over several years, and will continue to engage with the
Campaign Group and authorities who request
information.
HSBC continues to engage with the Campaign Group and respond to
queries from their representatives. A meeting was scheduled in
March 2020 between the parties. However, due to the immediate
challenges as a result of the Covid-19 pandemic the meeting was
cancelled.
HSBC
met with the All Party Parliamentary Group in the summer of 2019
and advised that it has given full consideration to the State
Deduction in a manner that it believes is both fair and
proportionate. HSBC will continue to engage with the Campaign Group
and respond to their queries. We will also engage with the All
Party Parliamentary Group and any other authorities who request
information at the bequest of the Campaign Group.
Appendix 6
Directors' interests in the ordinary shares and debentures of
HSBC
According
to the register of Directors' interests maintained by the Company
pursuant to section 352 of the Securities and Futures Ordinance of
Hong Kong, the Directors who are standing for election or
re-election had the following interests, all beneficial unless
otherwise stated, in the shares and debentures of HSBC and its
associated corporations on the latest practicable date prior to the
printing of this document being 10 March 2021.
In
this Appendix, all references to "beneficial owner" means a
beneficial owner for the purposes of the Securities and Futures
Ordinance of Hong Kong.
|
|
|
Jointly
|
|
|
|
|
Child
|
with
|
|
|
|
Beneficial
|
under 18
|
another
|
|
Total
|
HSBC
Holdings plc ordinary shares
|
owner
|
or spouse
|
person
|
Trustee
|
interests
|
James
Forese1
|
115,000
|
-
|
-
|
-
|
115,000
|
Steven
Guggenheimer1
|
-
|
-
|
15,000
|
-
|
15,000
|
Irene
Lee
|
15,000
|
-
|
-
|
-
|
15,000
|
Dr
José Antonio Meade Kuribreña1
|
15,000
|
-
|
-
|
-
|
15,000
|
Eileen
Murray1
|
75,000
|
-
|
-
|
-
|
75,000
|
David
Nish
|
-
|
50,000
|
-
|
-
|
50,000
|
Noel
Quinn2
|
878,317
|
-
|
-
|
-
|
878,317
|
Ewen
Stevenson2
|
601,690
|
-
|
-
|
-
|
601,690
|
Jackson
Tai1,3
|
32,800
|
11,965
|
21,750
|
-
|
66,515
|
Mark E
Tucker
|
307,352
|
-
|
-
|
-
|
307,352
|
Pauline
van der Meer Mohr
|
15,000
|
-
|
-
|
-
|
15,000
|
1. James Forese has an
interest in 23,000, Steven Guggenheimer has an interest in 3,000,
Dr José Antonio Meade Kuribreña has an interest in 3,000,
Eileen Murray has an interest in 15,000 and Jackson Tai has an
interest in 13,303 listed American Depositary Shares ("ADS"), which
are categorised as equity derivatives under Part XV of the
Securities and Futures Ordinance of Hong Kong. Each ADS represents
five HSBC ordinary shares.
2. Executive Directors'
other interests in HSBC ordinary shares arising from the HSBC
Savings-Related Share Option Plan (UK) and the HSBC Share Plan 2011
are set out in the Scheme interests in the Directors' remuneration
report on page 229 of the 2020 Annual Report & Accounts. At 10
March 2021, the aggregate interests under the Securities and
Futures Ordinance of Hong Kong in HSBC ordinary shares, including
interests arising through employee share plans and the interests
above were: Noel Quinn - 2,551,427; and Ewen Stevenson - 2,444,434.
Each Director's total interests represents 0.01% of the shares in
issue and 0.01% of the shares in issue excluding treasury
shares.
3. Jackson Tai has a
non-beneficial interest in 11,965 shares of which he is
custodian.
Notifications of major holdings of voting rights
The
following notifications of major holdings of voting rights have
been made to the Company and have not been amended or withdrawn, as
at 10 March 2021, the latest practicable date prior to printing
this document, pursuant to the requirements of the UK Financial
Conduct Authority's Disclosure Guidance and Transparency Rule
5:
●
BlackRock,
Inc. gave notice on 3 March 2020 that on 2 March 2020 it had the
following: an indirect interest in HSBC Holdings ordinary shares of
1,235,558,490; qualifying financial instruments with 7,294,459
voting rights that may be acquired if the instruments are exercised
or converted; and financial instruments with a similar economic
effect to qualifying financial instruments, which refer to
2,441,397 voting rights, representing 6.07%, 0.03% and 0.01%,
respectively, of the total voting rights at 2 March
2020.
The
following notifications of major holdings have been made to the
Company and have not been amended or withdrawn, as at 10 March
2021, the latest practicable date prior to printing this document,
pursuant to the requirements of section 336 of the Securities and
Futures Ordinance of Hong Kong:
●
BlackRock,
Inc. gave notice on 1 September 2020 that on 27 August 2020 it had
the following interests in HSBC Holdings ordinary shares: a long
position of 1,477,023,361 shares and a short position of 38,760,188
shares, representing 7.14% and 0.19%, respectively, of the ordinary
shares in issue at that date.
●
Ping
An Asset Management Co., Ltd, gave notice on 25 September 2020 that
on 23 September 2020 it had a long position of 1,655,479,531 in
HSBC Holdings ordinary shares, representing 8.00% of the ordinary
shares in issue at that date.
Appendix 7
Online User Guide to the Lumi Platform
If you choose to attend the AGM
electronically, you will be able to view a live webcast of the
meeting, ask the Board questions and submit your votes in real
time. You will need to visit https://web.lumiagm.com on
your smartphone, tablet or computer. You will need the latest
versions of Chrome, Safari, Internet Explorer 11, Edge or Firefox.
Please ensure your browser is compatible.
Meeting ID: 126-225-642
To login you must have your Shareholder Reference Number and
PIN
|
1. On
the day of the AGM, open the Lumi AGM website and you will be
prompted to enter the Meeting ID.
Note: Access to the Lumi AGM website will be available from 2.00pm
London time (9.00pm Hong Kong time) on Thursday, 27 May 2021 to
register for the telephone service - see step 3 below.
|
|
2. After
entering the Meeting ID, you will be prompted to enter your unique
Shareholder Reference Number ("SRN") and PIN. This would be on your
Proxy Card.
Note: Proxies and corporate representatives will need to obtain a
Unique Username and PIN from the registrar in order to be able to
access the Lumi AGM website - see pages 29 to
30. The Unique Username should be entered in place
of the SRN.
|
|
3. When
successfully authenticated, you will be taken to the Home
Screen
Note: If you wish to use the telephone service, the details will
appear in this section of the website. Please follow the
instructions in order to be able to access the telephone service.
Registration for the telephone service will be available from
2.00pm London time (9.00pm Hong Kong time) on Thursday, 27 May
2021
|
|
4. To
view the meeting presentation, expand the "Broadcast Panel",
located at the bottom of your device. If viewing through a browser,
it will appear automatically. This can be minimised by pressing the
same button
|
|
5. When
the Chairman declares the poll open, a list of all resolutions and
voting choices will appear on your device. Scroll through the list
to view all resolutions
|
|
6. For
each resolution, press the choice corresponding with the way in
which you wish to vote. When selected, a confirmation message will
appear
|
|
7. To
change your mind, simply press the correct choice to override your
previous selection. To cancel your vote, press Cancel. To return to
the voting screen whilst the poll is open, select the voting
icon
|
|
8. If you would like to ask a
question, select the messaging icon. Type your message within the
chat box at the bottom of the messaging screen. Click the send
button to submit
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|
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
HSBC
Holdings plc
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|
|
|
By:
|
|
Name:
Aileen Taylor
|
|
Title:
Group Company Secretary and Chief Governance Officer
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|
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Date:
24 March
2021
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