Annual General Meeting (AGM)

A meeting conducted annually where the members of an organization gather to discuss and vote on key issues

What is an Annual General Meeting (AGM)?

An Annual General Meeting (AGM) is a meeting conducted annually where the members of an organization gather to discuss and vote on key issues. Public companies hold annual general meetings for shareholders. At the meetings, many individuals who comprise the company’s leadership give speeches and answer questions from shareholders regarding its short-term and long-term strategies.

 

Annual General Meeting (AGM)

 

The board of directors is also present in the AGM and may present items for proxy. Proxy items are items that are to be voted on by shareholders that are often related to the election of specific board members. Annual general meetings also occur within other institutions and bodies and are often mandated to occur by law or membership.

 

Public Companies and the Annual General Meeting

In the United States and many other countries, it is a legal requirement for a public company to hold an annual meeting. At the meetings, often, many items are voted on by the shareholders that are of pivotal importance to the direction and leadership of a company. Annual shareholder meetings can sometimes be contentious, i.e., if a company is in financial turmoil.

Large institutional shareholders may show up and air their grievances with the leadership of the company that they hold a large stake in. If the company’s stock is performing poorly, investors present at the annual meetings can get into verbal arguments with the board of directors or even demand the board be removed in place of different leadership.

All annual meeting materials for public companies traded in the United States are available online. Proxy materials are also to be made available online for shareholders to vote on.

 

Questions for Leadership

If you are a dissatisfied shareholder and are thinking about going to an annual general meeting for a company of which you are shareholder, an AGM can be a good time to get further clarification on any issues you may have with management or leadership. At the meeting, you can gain further insight into the decisions they are making that you may be unhappy with.

It can help you decide if you would like to continue to be a shareholder or wish to sell your position. It may even help you decide if you would like to even take a short position if you believe their responses spell trouble for the company.

 

Responsibilities When Attending an AGM

In addition to the standard responsibilities when attending a meeting of such size, like being respectful and cordial of others, when you attend an AGM, you are also acting as a voice for shareholders who are unable to attend the meeting due to distance or other constraints. As such, making sure you are educated on the topics you ask questions about.

Having researched and understood the issues you are raising can help make sure that you are making valuable use of the time allotted for an AGM. After all, if you have a legitimate question that has not been answered before, it is very likely that others not attending the meeting have the same question as well, and will be pleased to hear you ask it.

 

Annual General Meetings in a Free Market

Annual general meetings play a particularly important role in a free market economy. They help encourage transparency, give investors a voice, and promote accountability. By giving investors and leaders a chance to speak during an AGM, it can help provide valuable feedback and may even bring about constructive and positive change within an institution.

 

In Summary: The AGM as a Market Actor

  • The annual general meeting is a gathering that takes place annually, generally done by public companies to vote on key issues and elect a board of directors.
  • All annual meeting materials for public companies traded in the United States are available online, with proxy materials being made available to vote on.
  • At an AGM, you can gain further insight into any decision a company leadership has made and help you decide whether you want to remain a shareholder or perhaps take a short position.
  • AGMs help promote accountability and give every investor a voice in the direction and leadership of their company.

 

More Resources

CFI offers the Certified Banking & Credit Analyst (CBCA)™ certification program for those looking to take their careers to the next level. To keep learning and developing your knowledge base, please explore the additional relevant resources below:

  • Activist Shareholder
  • Proxy Vote
  • Fiduciary Duty
  • Private vs Public Company

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