Annual general meeting is an institution for the protection of share holder of a company which prove the ultimate control and destiny of a company is vested in the hand of it share holders.
Definition of Share:
Share is a finite number of equal portions in the capital of the company. In Financial Markets, Share is a “unit of account” for various financial instruments. The person who owns shares is called shareholder. Stock typically takes the form of shares of common stock (or voting shares). As a unit of ownership, common stock typically carries voting rights that can be exercised in corporate decisions. Preferred stock differs from common stock in that it typically does not carry voting rights but is legally entitled to receive a certain level of dividend payments before any dividends can be issued to other shareholders. Convertible preferred stock is preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Shares of such stock are called “convertible preferred shares” (or “convertible preference shares” in the UK
Although there is a great deal of commonality between the stocks of different companies, each new equity issue can have legal clauses attached to it that make it dynamically different from the more general cases. Some shares of common stock may be issued without the typical voting
rights being included, for instance, or some shares may have special rights unique to them and issued only to certain parties. Note that not all equity shares are the same
Importance of the Annual General Meeting (“AGM”)
An importance mechanism that drives good corporate governance is the practice that shareholders exercise their rights in monitoring, inquiring, and voting in the shareholders’ meeting to ensure that management act for the best interest of the company. To accommodate shareholders’ rights to participate in making important business decisions, the Public Company Act requires the company to convene the Annual General Meeting (“AGM”) within 4 months of the last day of the fiscal year of the company. In this regard, an effective AGM arrangement will come from sides, the company and the shareholders who are aware of the importance of good AGM.
The AGM is a two-way communication for shareholders in discussing significant issues. The shareholder, therefore, should attend the shareholders’ meeting or appoint a person to vote on their behalf to protect their rights. Moreover, the company should facilitate all shareholders to vote on important matters and provide sufficient and timely information prior to the meeting for solicitation proxy from other shareholders.
Background of the AGM Assessment Project
In early September 2005, the World Bank released a Corporate Governance Assessment Report on the Observance of Standards and Codes (CG-ROSC) of the Thai capital market, noting that Thailand had taken important steps to address weaknesses in its corporate governance framework. Yet, there remained challenges moving forward, especially those concerning the protection of shareholders’ rights. The CG-ROSC showed that many issues in the area involved the Annual General Shareholders Meeting and can be handled reasonably. For example, before the AGM Day, meeting notices and agendas should be posted on company websites and shareholders assured of the right to propose additional agendas. Also, other arrangements must be made to facilitate shareholders’ attendance on the AGM Day.
Given the indispensable role of the AGM, The SEC led a cooperative effort with the Thai Investors Association and the Thai Listed Companies Association in launching the AGM Assessment Project in early 2006 to increase awareness of the AGM as an essential element of good corporate governance principles.
An Annual General Meeting, commonly referred to as an AGM, is a formal meeting which is held once a year. It is a legal requirement for voluntary organizations that have company status. It is good practice for charities to have an AGM to act as a review of the year and deal with issues such as the election of committee/board members and reviewing the annual accounts. Each individual organization should have a section of its Constitution which deals with AGMs, and this gives guidance as to how the AGM should be run and what matters should be dealt with. Although it is a formal meeting, it can also be a good opportunity to communicate with members, clients, partners and other interested parties.
Again, each organization should find guidance in its Constitution regarding when an AGM should take place. It does need to take place following the end of your financial year when accounts have been audited.
Your Constitution should also give guidance on electing committee or board members. It is advisable to ask for nominations before the AGM, which should be proposed and seconded. Check whether your constitution has rules about who is allowed to stand as a committee or board member.
Publicity and Invitations
It is usual for organizations to be required to give advance notice of the AGM. Your Constitution may state that this notice needs to be made public, e.g. through the local newspaper, and by writing to members 21 days prior to the event. A copy of the agenda (see below) should be sent along with the invitation. Committee and Board members should attend, and normally staff and other volunteers are encouraged to attend. Invitations may also go out to clients, and local decision-makers as appropriate.
The venue needs to be as accessible as possible. Try to find out beforehand if attendees have particular requirements, e.g. wheelchair access, translation services. It is useful if the venue has a microphone.
Running the AGM
The AGM is normally conducted by the Chair of the organization. Minutes of the meeting should be taken by the Secretary. A typical AGM agenda will cover the following items:
- Opening remarks/Welcome
- Minutes of previous AGM
- Matters arising from the Minutes
- Presentation of Annual Report (Chair/Secretary)
- Adoption of Annual Report
- Presentation of Accounts (Treasurer)
- Adoption of Accounts
- Appointment of Auditors/Independent Examiner
- Election of Management Committee/Office Bearers
- Motions to be put to the AGM
- Any Other Competent Business
- Closing remarks
More details on each of these headings are available below.
Apologies from individuals who have been unable to attend are read out and recorded.
Minutes / Matters Arising
It is usual to place copies of the minutes, the annual accounts and any other papers, on the seats of those attending, if it has not been possible to send them out beforehand. Matters arising from the minutes should be taken in the order they appear. In some cases the Chair may ask that matters arising be dealt with during the course of the meeting. The minutes of the previous AGM should be formally adopted by a proposer and a seconded, whose names should be recorded.
Presentation of Annual Report
The annual report can be presented by the Chair or the Manager/ Coordinator. It should give an overview of the main achievements of the year. The new Charity Regulations give specific guidance on the required content for annual reports in relation to Registered Charities.
Presentation of Accounts
The accounts are presented by the Treasurer. It is usual for copies of the accounts to be given to those attending. The Treasurer will highlight some of the figures in the accounts, explaining any that need explanation, and give a general overview of the financial position of the organization. It is usual for them to thank the auditor/independent examiner if appropriate.
Auditor or Independent Examiner.
An audit by a registered auditor is required:
- If the organization’s gross income, or expenditure in the current or preceding two years is in excess of £500,000 (this applies both to Charities with Company status and to Unincorporated Charities – that is Charities that don’t have any other legal form apart from Charitable Status)
- If there is a requirement in the organization’s constitution
- If the voluntary management committee choose to appoint one
If none of these requirements apply, the organization may only need to have its accounts examined independently. This does not have to be carried out by a registered auditor and is not usually as expensive. However, Charity Law in Scotland now has certain requirements regarding who is eligible to act as an independent examiner, depending on whether your organization’s accounts are kept in the Receipts and Payments format or are fully accrued. For more details, please consult OSCR’s guidance booklet on Independent Examination.
If there is a requirement for a full audit, the audit must be undertaken by a registered auditor i.e. someone who is a member of a professional organization that registers auditors. If your organization is a constituted community group that does not have Charitable or Company Status, then an independent examination should meet your requirements. In this case, an independent examiner can be any independent person who the committee believes has the ability and experience to examine the accounts such as a banker, business person, or accountant. It should not be carried out by a member of the committee.
Appointment of Auditors
If an organization is happy with the performance of its auditors it is usual to move for adoption of the existing auditors. If for some reason there is to be a change of auditor, this can be arranged by the committee during the coming year.
Election of Management Committee/Office Bearers
The constitution will provide guidance on the election of committee or Board members, including the length of time they should serve. Each individual wishing to stand needs to have a proposer and a seconded.
Check your constitution to find out who is eligible to vote at the AGM. If the constitution does not provide clear guidance on what to do in the event of a tie, then it is usual practice for the Chair of the organization to have a casting vote. The existing committee need to be clear about voting procedures as laid out by the constitution before attending the AGM.
Motions to be put to the AGM
A Motion to be put to an AGM should usually be received by the organization an agreed time before the AGM, so that it might be included with the papers sent out to those attending. Some organizations do not allow motions to be put at the AGM on the spur of the moment. Motions may take a number of forms. There may be a motion to petition the Scottish Parliament, or the local authority; in support of the actions of another organization; to change the direction or the organization or increase/limit the extent of its work.
Any proposed amendments to the constitution are also discussed at the AGM. These have usually been discussed by the present committee and the Chair may wish to take a few moments to explain why the Committee believe that the change is needed. Amendments are often made to update the constitution in the light of new legislation or new circumstances. When the motion or amendment has been presented a vote will take place.
Any Other Competent Business
Some organizations choose not to include this on the agenda. AOCB can double the length of a meeting and throw up many unexpected questions and comments. On the other hand, it can be a useful opportunity for those who are involved with, or interested in your organization to have their say.
Conclusion of Business
Annual General Meeting (AGM) is the Cristal clear picture of the company. It shows the current financial position of the company. Total profit, loss and growth of the company. The weakness and strength of the company. Base on this financial position it can be assume what will be done in future. That means future forecast and future growth can be guess by the AGM. In this séance AGM is the protection of the share holder.