Annual general meeting

Definition

An annual general meeting (AGM) is a mandatory yearly gathering of a company's shareholders, where they discuss the company's performance, elect board members, and make key decisions. This meeting serves as a crucial platform for shareholders to exercise their voting rights, ensuring that they have a say in the governance of the company and its strategic direction.

5 Must Know Facts For Your Next Test

1. AGMs are typically held within a specific time frame set by law, often within six months of the end of a company's fiscal year.
2. Shareholders can ask questions and raise concerns during AGMs, providing an opportunity for transparency and accountability from the company's management.
3. In many jurisdictions, companies are required to provide a notice period for AGMs, ensuring that shareholders have adequate time to prepare and participate.
4. Resolutions presented during an AGM can cover various topics, including executive compensation, dividend policies, and approval of financial statements.
5. If a shareholder cannot attend an AGM in person, they can utilize proxy voting to ensure their voice is heard in the decision-making process.

Review Questions

• How does the annual general meeting empower shareholders in a company's governance?
  • The annual general meeting empowers shareholders by providing them with a forum to discuss important aspects of the company's performance and strategy. At the AGM, shareholders have the opportunity to vote on critical matters such as board elections and major policy changes. This engagement ensures that their interests are represented and allows them to hold management accountable for their decisions.
• What are some common resolutions that can be voted on during an annual general meeting, and how do they impact corporate governance?
  • Common resolutions voted on during an annual general meeting include the election of board members, approval of financial statements, dividend declarations, and executive compensation packages. These resolutions significantly impact corporate governance as they determine the leadership structure, financial health, and strategic direction of the company. Shareholders’ votes on these resolutions reflect their confidence in management's ability to steer the company effectively.
• Evaluate the implications of proxy voting for shareholder participation at annual general meetings.
  • Proxy voting plays a vital role in enhancing shareholder participation at annual general meetings, especially for those who cannot attend in person. By allowing shareholders to delegate their voting rights, proxy voting helps ensure that even those with busy schedules or geographical constraints can still influence key decisions. However, it also raises concerns about whether proxies accurately represent shareholder interests and how much power is concentrated in the hands of a few individuals or institutional investors when many retail shareholders opt for proxies.

Related terms

Shareholder Rights: The entitlements that shareholders have to vote on key corporate matters, receive dividends, and participate in the decision-making processes of a company.

Proxy Voting: The process that allows shareholders to delegate their voting rights to another person or entity to vote on their behalf at shareholder meetings.

Board of Directors: A group of individuals elected by the shareholders to oversee the management of the company and make significant decisions on its behalf.