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Annual General Meeting
Annual general meeting (AGM, also known as the annual meeting) is a meeting of the general membership of an organization. These organizations include membership associations and companies with shareholders. These meetings may be required by law or by the constitution, charter, or by-laws governing the body. The meetings are held to conduct business on behalf of the organization or company. An annual general meeting (AGM) is a yearly gathering of a company’s interested shareholders. At an AGM, the directors of the company present an annual report containing information for shareholders about the company’s performance and strategy. Shareholders with voting rights vote on current issues, such as appointments to the company’s board of directors, executive compensation, dividend payments, and the selection of auditors.
KEY TAKEAWAYS
(1) An annual general meeting (AGM) is the yearly gathering of a company’s interested shareholders.
(2) At an annual general meeting (AGM), directors of the company present the company’s financial performance and shareholders vote on the issues at hand.
(3) Shareholders who do not attend the meeting in person may usually vote by proxy, which can be done online or by mail.
(4) At an AGM, there is often a time set aside for shareholders to ask questions to the directors of the company.
(5) Activist shareholders may use an AGM as an opportunity to express their concerns.
How an Annual General Meeting (AGM) Works
An annual general meeting, or annual shareholder meeting, is primarily held to allow shareholders to vote on both company issues and the selection of the company’s board of directors. In large companies, this meeting is typically the only time during the year when shareholders and executives interact. The exact rules governing an AGM vary according to jurisdiction. As outlined by many states in their laws of incorporation, both public and private companies must hold AGMs, though the rules tend to be more stringent for publicly traded companies.
Purpose
An organization may conduct its business at the annual general meeting. The business may include electing a board of directors, making important decisions regarding the organization, and informing the members of previous and future activities. At this meeting, the shareholders and partners may receive copies of the company’s accounts, review fiscal information for the past year, and ask any questions regarding the directions the business will take in the future. At the annual general meeting, the president or chairman of the organization presides over the meeting and may give an overall status of the organization. The secretary prepares the minutes and may be asked to read important papers. The treasurer may present a financial report. Other officers, the board of directors, and committees may give their reports. Attending this meeting are the members or the shareholders of the organization, depending on the type of organization. At such a meeting, the company secretary plays a crucial role in convening, conducting, and attending the meeting. They may be supported by their corporate secretarial team.
Qualifications for an Annual General Meeting (AGM)
The corporate bylaws that govern a company, along with its jurisdiction, memorandum, and articles of association, contain the rules governing an AGM. For example, there are provisions detailing how far in advance shareholders must be notified of where and when an AGM will be held and how to vote by proxy. In most jurisdictions, the following items, by law, must be discussed at an AGM:
(1) Minutes of the previous meeting: The minutes of the previous year’s AGM must be presented and approved.
(2) Financial statements: The company presents its annual financial statements to its shareholders for approval.
(3) Ratification of the director’s actions: The shareholders approve and ratify (or not) the decisions made by the board of directors over the previous year. This often includes the payment of a dividend.
(4) Election of the board of directors: The shareholders elect the board of directors for the upcoming year.
Additional Topics Covered at an Annual General Meeting (AGM)
If the company has not been performing well, the AGM is also when shareholders can question the board of directors and management as to why performance has been poor. The shareholders can demand satisfactory answers as well as inquire about the strategies that management plans to implement to turn the company around. The AGM is also when shareholders can vote on company matters other than electing the board of directors. For example, if management is contemplating a merger or an acquisition, the proposal can be presented to the shareholders, and they can vote on whether or not the company should proceed.
Several other elements may be added to an AGM agenda. Often, the company’s directors and executives use an AGM as their opportunity to share their vision of the company’s future with the shareholders. For example, at the AGM for Berkshire Hathaway, Warren Buffett delivers long speeches on his views of the company and the economy as a whole.
Berkshire Hathaway’s annual gathering has become so popular that it is attended by tens of thousands of people each year, and it’s been dubbed the “Woodstock for Capitalists.”
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