An annual general meeting (AGM) is a yearly gathering of a business’s directors and shareholders. Your business’s AGM is an opportunity for your shareholders to meet, vote and discuss the direction in which to take the business’s activities. In large companies, this meeting can be the only time during the year when shareholders and executives interact, so it’s important to run an effective AGM.
What is an AGM and why do we need them?
At your AGM directors will present information about the company’s performance and strategy at an AGM and shareholders with voting rights can vote on relevant decisions.Typically new appointments to the board of directors, executive compensation, dividend payments and the selection of auditors. Shareholders who can not attend the meeting face to face, may usually vote by proxy, which can be done online or by mail. Depending on the scale and scope of your business, there is usually time allocated within the meeting for shareholders to quiz the directors and to express their concerns. Your AGMs are important for the transparency they provide and the ability to include shareholders, as well as hold management to accountability. Many businesses and other legally registered bodies are required by law or by constitution to hold an AGM. In such spaces failing to do so has potential legal consequences for the directors.
A general meeting required to be held by a public company, within six months beginning with the day following its accounting reference date. Or a private company which is a traded company in each period of nine months beginning with the day following its accounting reference date. Private companies that are not traded companies are not obliged to hold AGMs. The Companies Act 2006 does not specify exactly what information must be covered at your AGM, nor are there any restrictions. Usually the meeting is used for matters which must be dealt with each financial year, such as the re-election of directors, fixing the remuneration of auditors and consideration of the annual accounts, directors’ report and auditors’ report.
The topics you cover in your AGM will depend on your industry and the particular issues affecting your business at the time of your meeting. However there are more generalised expectations which we’ll cover here.
Minutes of the previous meeting
The minutes of last year’s AGM should be presented and approved
The business should present its annual financial statements to the shareholders for approval
Ratification of the director’s actions
The shareholders approve and ratify the decisions made by the board of directors over the previous year. This typically includes the payment of a dividend.
Election of the board of directors
The shareholders will elect the board of directors for the forthcoming year.
How to Run an Effective AGM
Done well, your AGM should be a constructive forum for effective engagement throughout the business. Traditionally, general meetings are held in physical venues, allowing for dynamic dialogue in person, however many businesses accept that hybrid meeting, allowing shareholders to dial in online is also effective, both for streamlining attendees’ time as well as costs to the business. Especially for large companies with potentially thousands of shareholders. How you decide to host your AGM will depend on the scale of your business and the scope of the meeting content. Most communication platforms include features to help you host presentations and voting systems to help you run an effective AGM whilst shareholders work from home. Either way, the first step towards running an effective AGM is properly briefing the shareholders beforehand. Offer clear instructions on how to attend the meeting now to participate and what is expected of your attendees. You should also include details for how to appoint and instruct a proxy, if necessary. Whether your AGM is in-person, online or hybrid. Make sure you open with introductions and housekeeping information, including how to participate and an overview of the schedule, including any breaks and at what point shareholders will be expected to interact.
Keep it Simple
Make sure your financial information is presented clearly and concisely. Not every shareholder will be from a financial background, so the more clearly you can present your figures, and what those particular figures reveal about the success of the business, the more effective knowledge sharing will be. You want a diverse range of perspectives to help inform the direction your business will take. If you intend to cover various areas of the business, pause to take questions to ensure that the information has been digested, before you move on to your next item. It is also helpful to summarise key takeaways for your shareholders. Try to anticipate what information your shareholders may want to query and be prepared with more details. Another component of running an effective AGM is keeping to time. Allocate a maximum time slot for each item, so that if you begin running out of time you can keep the AGM you can choose to move on and perhaps revisit certain details in your Q&A. If you allocate generous time slots, you may even find yourselves finishing early and this allows for a bit more Q&A or socialising before you end the AGM. A relaxed environment will put your stakeholders at ease, so be polite and check in with familiar faces.
Hopefully you will find yourself reporting profits at your AGM. However losses can still be a useful source of learning. So manage expectations and report honestly. Your shareholders are there to help you steer your business and your success is in their interest, so accept feedback and make sure you are hearing from a range of perspectives. Ask specific questions to some of your shareholders to keep them involved. Use the guidance you receive and remember to report on any steps you take, the following year.
At Prestige Business Management we can help your Business
Prestige Business Management can help you prepare your accounts and financial statements. Call us today on 0203 773 2927.