Preparing for a successful AGM

With the AGM season fast approaching, Company Directors has updated a vital guide to help directors prepare, convene and conduct efficient and effective annual general meetings.

The annual general meeting (AGM) is one of the key events on the corporate calendar. It is a mechanism for keeping the board accountable for the performance of directors and the company, and for engendering transparency in company reporting.
 The AGM and its role have been the subject of much discussion and debate as part of the Corporations and Markets’ Advisory Committee (CAMAC) consultation on its discussion paper, The AGM and Shareholder Engagement. Company Directors provided a response to the CAMAC discussion paper in December 2012 that is available on the Company Directors website.

For members and shareholders, the AGM is a chance to see who the directors are, to engage those responsible for leading the company and to participate in certain key items of company business. For directors, and in particular the chairman, the AGM imposes a range of obligations. For example, the company must discharge the items of business required by law and the company constitution.

AGMs also offer directors the opportunity to communicate their vision for the company, explain its recent performance and to hear from shareholders without the filter of intermediaries.

Company Directors believes a solid understanding of meeting procedure and effective preparation before the AGM will help directors approach all aspects of the meeting with confidence. With this in mind, it has published a second edition of Annual General Meetings: A guide for directors. This guide sets out the principal steps required to prepare for, convene and conduct an efficient and effective AGM for all types of organisations.

As all good directors know, solid preparation is essential for ensuring the AGM’s success and that the board and company comply with the Corporations Act 2001, company constitution and other relevant rules.

There are numerous steps to be taken before the AGM. The chairman, in consultation with the board, must consider the composition of the board before the election of directors at the AGM and the board must pass all necessary resolutions to facilitate the holding of the AGM. Directors of public companies, will (subject to certain exceptions) also need to ensure the preparation of the financial report, the directors’ report and the auditor’s report. For listed companies, the directors’ report will include the remuneration report.

Consideration must also be given to an appropriate venue and the intended use of any technology at the meeting. Directors must also ensure the company provides each director, member and the auditor with the necessary information and notices. This includes the notice of meeting, the reports to be laid before the AGM and any explanatory, member or director statements that need to be circulated. The content of these documents must comply with all relevant legislative requirements.

The chairman plays a key role on the day of the AGM and is responsible for the procedural control of the meeting. Effectively chairing an AGM can have a positive effect on the company’s efforts to engage its shareholders. The responsibilities of the company and chairman in relation to the AGM continue after the meeting, when preparing and signing minutes, for example, will come into focus.

How to take these and other steps is discussed in more detail in the updated AGM guide. For new directors, this book will be a useful introduction to AGM procedure and a starting point for further inquiry into this topic. For more seasoned directors, the book will be a reminder of the key procedural requirements.

MEMBERS PARTICIPATE IN THE AGM BY:

• Electing directors.
• Participating in a non-binding vote on the remuneration report (for listed companies).
• Approving any appointment or change of auditor.
• Considering and questioning the board and the auditor on matters arising from the annual report.
• Voting on special business if scheduled for the AGM, such as changing the capital structure of the company, selling major assets, considering related-party transactions, removing directors and approving the non-executive director remuneration cap.

Source: Annual General Meetings: A guide for directors (2nd edition) Australian Institute of Company Directors, 2013

THE BUSINESS OF AN AGM

• A number of items of business may be considered at an AGM, even if they are not included in the notice of meeting. These are:
• The receipt and consideration of the annual financial report, directors’ report and the auditor’s report.
• The election of directors.
• The appointment of the auditor.
• The fixing of the auditor’s remuneration.
• It is considered good practice to include these items in the notice of meeting.

Source: Annual General Meetings: A guide for directors (2nd edition) Australian Institute of Company Directors, 2013

GET PREPARED!

To purchase Annual General Meetings: A guide for directors (2nd edition) in print or as an ebook, visit our website at: www.companydirectors.com.au/bookstore