Understanding the Annual General Meeting (AGM)

Annual General Meeting (AGM)An annual general meeting, or AGM, is a compulsory company meeting that happens once every year. This is a chance for a company to communicate with its shareholders and update them on its financial status. During this meeting, key company personnel share financial statements, and the shareholders are asked to approve these. Other items discussed in an AGM can include the re-election of the board of directors, potential changes to the directors’ salaries, and the declaration of dividends.

 

The AGM’s Purpose

The fundamental purpose behind an AGM is to validate that the company is adhering to legal requirements, such as maintaining financial statements and introducing a new auditor if required. An AGM also aids in making critical decisions for the company’s well-being and keeps the shareholders up-to-date about various company activities.

Delving deeper, we can break down the objectives of an AGM into these categories:

Ordinary Business-Driven Objectives

  • Share audited financial accounts with members and secure their approval.
  • Conducting a vote to elect Board of Director members.
  • Choosing the auditor(s) for the coming fiscal year.
  • Announcing the company dividends.

Special Business-Driven Objectives

  • Discuss any disputes or issues brought up by the investors.
  • Protecting the interests of the investors.

 

When is the AGM Held?

According to the Companies Act, Section 175, every private limited company should host their AGM within six months of the end of their financial year. Companies can ask for an extension to hold the AGM later, but the maximum extension allowed is 60 days. If a company does not follow these rules, it could be hit with a monetary penalty from ACRA for breaking the laws in the Companies Act.

Private companies can decide to have AGMs online instead of in person. To do this, they must pass a resolution to stop having physical AGMs and have all shareholders agree. However, they would still need to hold a physical AGM if:

  • A new resolution that overrides the previous one is passed.
  • A member requests an AGM within a specific time frame.
  • A member asks for an AGM within two weeks after financial statements are made public.

When holding an AGM online, the company secretary must provide all shareholders with the resolutions. A notice about an ordinary resolution should be delivered to shareholders at least two weeks before the meeting. If it’s a special resolution, the notice should be sent out three weeks before the event.

 

Is an AGM Necessary?

Yes, all company shareholders must hold an AGM.

 

Who Can Attend AGMs?

For a meeting to be valid, a minimum number of members, also known as a quorum, must be present at the AGM.

For private companies, at least two members have to attend.

For public companies:

  • Companies with 1000 members or fewer need at least five members at the AGM.
  • Companies with 1001 to 5000 members need at least 15 members at the AGM.
  • Companies with over 5000 members need 30 or more members at the AGM.

 

Proxy Vote during AGMs

If members cannot attend an AGM, they can nominate a proxy to vote on their behalf. However, a member must remember that they cannot appoint more than two proxy voters for any given meeting.