What is an Annual General Meeting (AGM)?
An Annual General Meeting (AGM) is a mandatory yearly gathering of a company’s shareholders where the directors present an annual report, which contains information for shareholders about the company’s performance and strategy. Shareholders vote on matters such as elections to the board of directors, executive compensation, dividend payments, and the approval of the company’s audited financial statements. The AGM allows shareholders to ask questions and express their views about the company’s performance and prospects.
Key Features:
- Annual Presentation: The company’s annual financial report is presented.
- Board of Directors: Shareholders may elect new directors or re-elect existing ones.
- Auditors: Appointment or re-appointment of auditors and audit committee is decided.
- Shareholder Resolutions: Decisions are made on shareholder proposals affecting corporate governance.
- Q&A Session: Shareholders have the opportunity to ask questions about the company’s outlook and operations.
Examples of Discussions at an AGM:
- Financial Performance: Presentation and discussion of the company’s annual financial statements, including income statement, cash flow statement, and balance sheet.
- Dividends: Determination and approval of dividend payments to shareholders.
- Corporate Strategy: Overview of the company’s strategic direction and future plans.
- Directors’ Reports: Updates from the board of directors on the company’s activities throughout the year.
- Shareholder Proposals: Consideration of proposals from shareholders on various aspects of corporate governance.
Frequently Asked Questions (FAQs)
Q: Is attendance at an AGM mandatory for all shareholders?
A: Attendance is not mandatory, but all shareholders are encouraged to participate to stay informed and exercise their voting rights.
Q: What happens if a shareholder cannot attend the AGM?
A: Shareholders can vote by proxy, allowing another person to vote on their behalf using previous instructions.
Q: Who can speak at an AGM?
A: Shareholders, directors, auditors, and executives typically have the right to speak and ask questions during the meeting.
Q: How are decisions made at an AGM?
A: Decisions are usually made by a majority vote of the shareholders present and represented by proxy.
Q: What documents are typically reviewed at an AGM?
A: The annual report, financial statements, board of directors’ reports, and auditor’s reports are typically reviewed and discussed.
Related Terms:
Proxy Voting
A method that allows shareholders to vote on matters of corporate governance without being physically present at the meeting.
Board of Directors
A group of individuals elected by shareholders to oversee the management of the company and protect their interests.
Dividend
A distribution of a portion of a company’s earnings, decided by the board of directors, to a class of its shareholders.
Quorum
The minimum number of shareholders that must be present (in person or by proxy) for the AGM to be legally valid.
Corporate Governance
A set of rules, practices, and processes used to direct and manage a company.
Online References:
- Investopedia: Annual General Meeting (AGM)
- Wikipedia: Annual General Meeting
- Corporate Governance Principles
Suggested Books for Further Studies:
- “Corporate Governance: Principles, Policies, and Practices” by Bob Tricker
- “The Intelligent Investor” by Benjamin Graham
- “Corporate Governance and Ethics” by Zabihollah Rezaee
- “Boards That Lead” by Ram Charan, Dennis Carey, and Michael Useem
Accounting Basics: “Annual General Meeting (AGM)” Fundamentals Quiz
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