Hong Kong’s exclusive American Club will hold a board meeting next Monday to look into concerns voiced over its latest policy change that requires non-US members to pay as much as HK$1.5 million (US$192,100) to retain their memberships or leave.
David Loan, general manager of the almost 100-year-old private club, told the Post on Friday the board would discuss the new policy and tell members if it made any revisions to the plan.
“They’ll talk about the whole thing, because obviously we’ve read what you’ve written … [and] what other media have written, and we will be talking about the whole programme on Monday night,” he said.
“Obviously, we’ve had lots of feedback from our members as well … If there are any revisions to the plan, our members will be informed on Tuesday.”
The club broke its silence after the controversial membership changes caught headlines three days earlier.
In an abrupt change of policy, club president Christopher Burgess announced in a letter to members, dated May 31, the new policy requiring non-American individual debenture holders to top up their membership by up to HK$1.5 million or leave the club.
The Post also learned some members were seeking legal advice over the fairness of the decision to redeem the debentures in such a sudden move.
Members must submit their declarations of intention by August 31. Those who fail to do so or pay the first instalment of the top-up amount will have their debenture redeemed at face value and their membership cancelled on September 1.
The club issued debentures of various values as a medium-term debt tool to fund major development projects from 1985 to 2007. Members who are not Americans have to pay a membership fee of between HK$1.6 million and HK$2 million by buying a debenture.
Burgess said the policy change stemmed from the club’s drive to improve its membership profile and maintain its non-profit tax status, which requires 50 per cent or more of the club’s operating revenues to come from voting American members.
The move could reduce the 500-strong group of non-American individual members who are non-voting.
But Burgess emphasised in the letter the new change was “a more thoughtful process which does not treat a membership as an asset, but as a privilege and opportunity to join the club which has been built on the American values of culture, friendship and community”.
Private equity investor Alex Emery, a non-US member of the club since 2021, said he felt the change was unfair and he was weighing his options.
“I feel it is very unfair for the club to treat members this way and they could have done this in a much more consultative way with the membership. As far as I know they didn’t solicit the opinion of any debenture holder in advance,” said Emery, a senior adviser at Permira.
Lucy*, a member who asked not to be named as she was seeking legal advice over the matter, said she was shocked by the sudden changes, particularly because she and her husband had joined the club less than a year ago.
She said she felt betrayed as she had paid a non-refundable HK$750,000 transfer fee to the club to buy a debenture from a member last year in order to join. She and her husband shared the same membership.
The club will only redeem the debentures at face value, which is about HK$300,000, if a member decides to opt out. This means Lucy will have to pay HK$1.2 million to keep her membership.
She said the club offered her a one-month extension of the deadline to redeem her membership.
Business magnate Allan Zeman, a corporate debenture holder who is not affected by the move, earlier said the decision smacked of discrimination amid geopolitical tensions between the West and China, adding that it did not send a positive message to the world while also upsetting a lot of people.
He noted the club might want to bring down the number of non-US members amid an exodus of American ones to continue to enjoy tax exemptions.
According to debenture conditions seen by the Post, the principal sum is not repayable on demand by the debenture holder, but may be paid off by the club at any rate with more than a month’s notice given in writing.
The club may redeem any particular debenture by such notice without redeeming the remainder.
The American Club, founded in 1925, said in its mission statement that it was dedicated to being a premier spot for social, recreational and business activities for members and their families in a distinctively US atmosphere.
Membership stood at 2,909 – 52 per cent American, 19 per cent Hongkongers and 10 per cent British.
The club posted a surplus of HK$1.4 million in the 2022-23 financial year with membership income from debenture transfer and renomination fees at HK$27.1 million.
Its financial reserves totalled HK$606 million at the end of June last year.
* Name changed at interviewee’s request.
