What Is an Annual General Meeting (AGM)?
An annual general meeting (AGM) is a yearly gathering where a company’s shareholders convene. During the AGM, the company’s directors present an annual report that outlines the company’s performance and strategic plans to the shareholders.
Shareholders holding voting rights participate in crucial decisions, such as appointing board members, determining executive compensation, issuing dividends, and selecting auditors.
Key Takeaways
- AGMs are annual gatherings for a company’s shareholders.
- Directors present financial reports at AGMs, and shareholders vote on important matters.
- Shareholders can vote by proxy if they are unable to attend in person.
- AGMs allow shareholders to interact with company directors.
- AGMs can be a platform for activist shareholders to voice concerns.
Investopedia / Sydney Saporito
How an Annual General Meeting (AGM) Works
An AGM, also known as an annual shareholder meeting, serves as a forum for shareholders to vote on company matters and select board members. In major corporations, this meeting represents the primary opportunity for shareholder and executive engagement.
The specific regulations governing an AGM vary by jurisdiction. However, both public and private companies must hold AGMs, with stricter guidelines typically in place for publicly traded firms.
In the event that an issue arises between AGMs, the company may convene an extraordinary general meeting.
Public companies must submit annual proxy statements, like Form DEF 14A, to the Securities and Exchange Commission (SEC). These filings outline details such as the meeting date, executive compensation, critical shareholder voting matters, and director nominations.
AGMs play a vital role in ensuring transparency, involving shareholders in decision-making, and holding management accountable.
Qualifications for an Annual General Meeting (AGM)
The rules governing an AGM are typically outlined in a company’s corporate bylaws, jurisdictional regulations, and memorandum and articles of association. These rules often define notification requirements, proxy voting procedures, and discussion topics mandated by law during an AGM:
- Previous meeting minutes: The approval of the previous AGM’s minutes is typically on the agenda.
- Financial statements: The company presents its annual financial reports for shareholder approval.
- Director actions ratification: Shareholders ratify the board’s prior decisions, including dividend payments.
- Board of director elections: Shareholders vote to elect the board for the upcoming term.
Additional Topics Covered at an Annual General Meeting (AGM)
During an AGM, shareholders can address poor company performance with the board and management, seeking explanations and future strategies for improvement.
Shareholders can also vote on other significant matters at an AGM, such as merger proposals presented by management.
Additionally, AGM agendas may include presentations by directors and executives outlining the company’s future vision to shareholders. For example, Warren Buffett delivers extensive speeches at Berkshire Hathaway’s AGM, reflecting on the company’s direction and economic outlook.
Berkshire Hathaway’s annual assembly has gained significant popularity, attracting large crowds and earning the nickname “Woodstock for Capitalists.”