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Annual general meeting (AGM) definition

AGM meaning

The annual general meeting is a meeting in which company directors, executive managers and shareholders with voting rights meet. During this meeting, shareholders are presented with company reports and information regarding company performance for the period under consideration. The primary purpose being to make decisions about the future activities and strategy of the company. At the meeting, shareholders may also vote on different issues and activities. The voting may concern current issues, such as voting on a proposed dividend, appointing directors, appointing auditors, approval of financial reports, and managers’ compensation. Through this meeting, the shareholders have the opportunity to participate in company matters directly and ensure that the company is moving in the desired direction.

Shareholders who are not present at the meeting may still vote by proxy on the issues on the agenda. These shareholders grant authorization to another shareholder or external person who then votes on their behalf.

What is an annual general meeting?

An AGM is a mandatory meeting that needs to be held by companies, especially publicly traded companies, and in some cases is obligatory by law. There could be differences regarding the agenda and the organization, depending on the jurisdiction. Differences can sometimes be found in the procedures for AGMs between a listed company and a private company. At an AGM, time is dedicated to allow shareholders to communicate directly with the directors and ask questions related to company matters.

Depending on the jurisdiction, there is a predefined period in which new AGM should be scheduled counting from the date when the last meeting was held. Also, there could be a specific window in which an AGM should be organized after the end of the financial year. For instance, the maximum allowed period between two AGMs should not be more than 14 months, or that the AGM should be scheduled no later than 9 months after the end of the financial year. Moreover, there is a set of rules regarding the AGM notice that is sent to the members. Members should be informed about the date when the next AGM will take place. Moreover, in order for the meeting to be held, there is a need for a quorum i.e. a minimum number of members should be present for the meeting to take place.

Difference between AGM and EGM

AGM should not be confused with EGM or extraordinary general meeting (EGM). EGMs are not obligatory meeting required by the law. Hence, an EGM is not subject to predefined time constraints and limitations. It can be held when there is a need for a meeting, typically when there are company matters needing immediate attention. It can be called, for example, if there is a need for exclusion of an executive manager or the company has undelayable legal issues. An EGM can also be called an emergency general meeting.

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