What happens during an Annual General Meeting?
An Annual General Meeting (AGM) is a yearly meeting held among company shareholders required by the law. The AGM is expected to provide shareholders with an accurate picture of the company’s financial health to its investors.
For this purpose, newly incorporated companies are required by the law to hold their first AGM within 18 months from incorporation. Subsequently, the company must hold an AGM every year, with no more than 15 months between two meetings.
What are the basic agenda in an AGM? The ordinary business of an AGM will differ according to a company’s Articles, but there are certain commonalities among companies. These include the declaration of dividends, the election of directors, and the appointment and fixing of auditors’ remuneration if any.
Furthermore, an AGM would also cover the consideration of a company’s accounts, balance sheets, as well as reports of both directors and auditors. Aside from these, all other agenda will be considered special business by the company.
What are some of the things that company officers need to remember when conducting an AGM? The following concepts are especially crucial: the quorum, the chairman, and the proxy.
The quorum: this refers to the minimum quantity of people who must be present in order for the AGM to be considered legally valid. Achieving a quorum would ensure that any agenda discussed, as well as decisions arrived at, constitute a majority decision from the company shareholders. According to Section 179 of the Companies Act, a company can have any two members or proxies who are personally present in order to have a quorum. Still, other companies can also stipulate under their own Articles what constitutes a quorum.
The chairman: an AGM will be administered by its so-called chairman, who will direct the course of the meeting. The AGM chairman is most often the chairman of the board of directors. In other cases, a company’s Articles can also specify who can take the meeting chairmanship, otherwise the quorum would have to appoint within themselves who will serve as the chairman.
The proxy: according to Section 181 of the Companies Act, a member who cannot be physically present in the AGM can appoint his or her proxy, who will then receive voting powers at the meeting. The company may specify under its Articles who may be appointed a proxy, and this appointment can be applied to just one meeting or all other company meetings.