Companies and organizations are obliged to hold annual general meetings to discuss matters with board members and shareholders. Conducting these meetings must be prepared and facilitated properly, as there are legal consequences at stake. But what exactly are annual general meetings? How should companies administer these meetings?
At a glance:
- Definition and purpose of AGMs
- Who attends AGMs?
- What should be discussed in annual general meetings?
- How to conduct AGMs?
- How can companies hold AGMs amid the COVID-19 pandemic and post-pandemic?
What is an annual general meeting (AGM)?
Annual general meetings (AGMs), also known as annual shareholder meetings, are yearly meetings orchestrated for board members and shareholders to discuss company matters and address raised resolutions. During these meetings, participants can ask the board questions concerning the company’s and shareholders’ welfare.
The purpose of AGMs is to give opportunities to shareholders to be aware of and evaluate the company’s health. This includes the usual business of presenting the annual company accounts and the director’s report. Apart from consolidating the yearly highlights of the company, annual general meetings are crucial as they serve as an avenue to gather approval from shareholders on resolutions and votes on board elections.
In cases where discussion and decisions cannot wait for the next annual general meeting, members and shareholders can still hold meetings. Extraordinary general meetings (EGMs) are meetings that are conducted between two AGMs. The board or any shareholder must requisition the EGM with one-tenth of the voting shares or the paid-up capital.
Who attends AGMs?
General meetings are usually held for the board of directors and shareholders to deliberate about the company accounts. Under the Company Act of 2006 for the UK and the corporations’ bylaws in most countries, public companies are mandated to conduct annual general meetings once every financial year.
The primary attendees of annual general meetings include:
- The board of directors
- The senior executives
- The company secretary
- The shareholders
- The company auditor
- The legal representatives
Companies can require outside representatives or proxies to attend the annual general meeting on behalf of the shareholders who would not partake in the AGM. The rules for employing proxy must be observed according to the company’s state corporation’s laws or bylaws.
Any candidate for the Board of directors who are not part of the above attendees should attend the AGM. Individual auditors in listed companies should partake in the general meeting. In cases that they cannot participate, they must send a qualified audit team member who has conducted the audit to answer questions concerning audits.
What should be on the agenda of annual general meetings?
Conducting AGMs smoothly can be achieved when meeting expectations are met. In order to do that, agendas must be set to prepare the board and the shareholders of the points to be deliberated. The initial notice for the annual general meeting must include the agenda of the meeting to provide shareholders with expectations on the discussion points.
Annual general meetings are standardized by law to deal with the following matters:
Approval of the Previous Annual General Meeting Minutes
Before moving to the matters to be discussed in the current AGM, the minutes of last year’s annual general meeting must be presented and approved. Any concern from the shareholders regarding the previous AGM should be addressed during this period.
Presentation of Financial Statements
The organization must present the annual financial report to the shareholders for their approval. The company auditor usually leads the presentation. The shareholders’ questions may relate to the audit proper, audit report, and the accounting policies.
Declaration of Dividend
Companies are required to declare the annual profit and distribute the dividend. The board of directors issues a statement on the amount paid in dividends to the shareholders over a specific timeframe.
Ratification of the Directors’ Report
To give a summary of the company’s highlights and actions, directors must present the decisions they have made over the previous year. Upon presentation, shareholders have the option to approve and ratify (or not) the report. Often, the payment of the dividends is stated here.
Election of the Board of Directors
One of the main objectives of holding AGMs is to elect or re-elect directors for the upcoming year. The board of directors provides the direction and governance for the company. Its term usually lasts until the next annual general meeting, but they could be re-elected according to the company’s bylaws.
Changes to the Organization’s Constitution
Directors and shareholders can set motions to revise the constitution of the organization if issues arise concerning a particular policy. Sending the agenda beforehand can ensure that attendees have reviewed the proposals and documents before voting on a revision in the articles of association.
Addressing Resolutions
Any company matter that requires voting must be submitted to the board of directors before the AGM and must be included as well on the agenda. Resolutions raised during the actual AGM that cannot be addressed immediately must call for an extraordinary general meeting.
How should companies conduct annual general meetings?
A successful and compliant annual general meeting requires preparation and adherence to specific policies. The procedures are generally the same as with other committee or directors’ meetings. However, there are guidelines to follow in preparing and conducting the annual general meeting.
Ensure Compliance of the AGM with State Laws
Most companies are obligated to conduct annual general meetings depending on the government regulations in the state or area where the company has been established.
There are statutory rules that govern the notice period of the meeting and the rights of the members. In informing the relevant parties of the occurrence of the AGM, directors are responsible for giving the notice to the shareholders and representatives. Under the Companies Act, the required notice period should be:
- At least 14 days for private companies,
- At least 21 days for public companies,
- At least 28 days for AGMs that the company’s members request
The formal notice must include the date and time of the meeting and the venue to conduct the meeting. The notice should be sent to the members via registers post or through email.
Prepare Before the Actual AGM
Holding large events, such as annual general meetings, requires preparation of the board beforehand. It is to ensure that the execution of the meeting will be smooth and there are lesser flaws. The elements that need to be checked and prepped include the agenda, the report presentations, and the minutes-taker.
The hosts and other logistical concerns must also be prepared before the actual AGM. Test the equipment for a presentation, discussion, and voting, as well as the registration desks for attendance.
Exercise Shareholder Rights and Engagement
As mandated by legal policies, shareholders have rights that companies should observe and give paramount importance. Exercising these rights, especially during AGMs, can protect the shareholders’ interests and concerns. Regardless of the number of shares owned, shareholders are entitled to these fundamental rights:
- Attend annual general meetings and extraordinary general meetings,
- Propose motions or resolutions to be discussed at the AGM,
- Ask questions to the board directors and auditors related to the agenda items,
- Nominate and be elected as part of the board,
- Vote on elections and resolutions raised at the meeting, and
- Appoint a proxy to vote on behalf of the shareholder
Annual general meetings are the main avenues for shareholders to practice their rights and express their satisfaction with the company’s actions. Meeting organizers must ensure that the meeting breeds shareholder engagement as this can mainly affect the company’s reputation. Additionally, companies must ensure that AGMs can cater to activist shareholders who have critical and influential roles in the company’s relationship with the shareholders.
Implement Seamless Voting
One of the shareholders’ rights is to vote on matters raised during the annual general meeting. The decision of the shareholders is crucial to the actions and directions of the board and the company.
Who can vote at the AGM?
All shareholders and directors registered in the holdings have the right to vote. On occasions that shareholders could not attend the annual general meeting, they can identify an independent proxy to represent their vote. To exercise this option, shareholders must comply with the procedure before the actual meeting.
Voting members are required to cast their votes on common resolutions at annual general meetings such as:
- Approval of reports and accounts
- Declaration of dividend
- Election or re-election of the board members
- Appointment of auditors and remuneration
- Amendments to the constitution
- Other resolutions proposed in the meeting
AGMs must satisfy the quorum requirements as prescribed by the Companies Act to confirm the validity of the voting results. Quorum is the minimum number of members present in the meeting. The company’s articles of association often determine the quorum requirements.
Additional Tips in Conducting Successful AGMs
Effective annual general meetings are thought of from preparation until the documentation of the meeting. Apart from the considerations above, here are other things to take note of when organizing AGMs.
- Seamless Meeting Process. Having a streamlined process, from preparation to the distribution of meeting minutes, can help ensure that all the elements needed have been prepared. This can benefit the meeting organizers and administrators, as they will have a lesser burden on their backs on the technical aspects of the meeting.
- Engagement and Accountability of Shareholders. Similar to any other meeting, annual general meetings should enable the engagement of shareholders through discussions and voting. Platforms or equipment must be installed to manage these actions. Tabulation of votes and documentation of questions from the shareholders must be ensured for transparency and accountability purposes.
- Meeting Security and Support. Though some annual general meetings can be attended or viewed publicly, companies must still provide security measures to the meetings’ reports, documents, and voting results. The privacy of the attendees or shareholders should also be guaranteed.
How can companies hold AGMs in the post-pandemic?
The consequences of the COVID-19 pandemic forced companies and organizations to go virtual in holding annual general meetings. Some companies were not allowed to postpone their AGMs which is why virtual platforms have seen a surge in utilization for board meetings.
However, video conferencing platforms, such as Zoom offer limited capacity to conduct a full AGM. There is a need to account for the above considerations to hold AGMs, most especially since the interest and engagement of the shareholders are at stake. Furthermore, companies need a platform that can guarantee security and promote AGM corporate governance.
ConveneAGM is a one-stop platform for executing virtual or hybrid annual general meetings. Its powerful features enable it to streamline the whole meeting process, from pre- to post-AGM. Prior to the actual meeting, organizers can configure the platform to assign users and meeting roles.
Companies can promote shareholder engagement with in-meeting features that can manage the virtual participation of attendees. The real-time webcast of the online AGM ensures shareholders can partake in the meeting, anywhere they are. Moreover, live Q&A and live voting empower users to participate actively in the meeting — resulting in increased engagement.
ConveneAGM prioritizes the security of the meeting. Organizers can opt to enable security measures such as two-factor authentication to control the access of the users. Audit trails are generated after the meeting to keep track of the users’ activities, ensuring transparency and accountability.
Administer your annual general meetings smarter and more efficiently with ConveneAGM. Explore virtual AGM now and see the difference.