What is an annual general meeting?
An annual general meeting (AGM) is a yearly meeting held by companies with their shareholders and other stakeholders to present their annual reports. These reports include information about the company’s performance and growth. Companies may also use the AGM to share their vision for growth.
During the annual general meeting, shareholders vote on several company-related matters, such as appointing the board of directors, payment of dividends, and auditor selection. Public companies hold AGMs yearly while private companies only hold them if it is specified in their articles of organization (a document outlining the rules and legal constitution of the organization).
Companies may also use the AGM to share their vision for growth.
What is the purpose of an AGM?
Companies maintain transparency with their shareholders by presenting their annual reports and voting on company matters at the annual general meeting (AGM).
Depending on the size of the company, the AGM is likely the only time shareholders meet executives. Public companies file annual proxy statements with the Securities and Exchange Commission (SEC), and these filings specify the date, location, and time of the annual general meeting.
What is discussed
Many of the things discussed in annual general meetings are required by law, such as notifying shareholders of the location and time of the meeting. If there will be voting, then the company must also explain how shareholders can vote by proxy.
Typically, these are the things discussed in an annual general meeting:
Summary of the previous meeting: The company presents the minutes of the previous annual general meeting for approval.
Annual report: The annual report, which includes the company’s financial statements, is presented to the shareholders.
Payment of dividends: The board of directors recommends a dividend payout to shareholders, which is then voted on by the shareholders. The dividend may also be used for reinvestment.
Election of the board of directors: The shareholders vote for new members of the board of directors for the coming year.
Q&A with the board of directors: Shareholders have the opportunity to ask questions of the board of directors about the company’s business, performance, and plans for the future.
The shareholders can also vote on other company matters such as the consideration of a merger or acquisition, changes to the company’s bylaws, or the sale of major assets.