In Short
- Public companies must hold an AGM within five months of their financial year-end.
- Attendees include directors, shareholders, and auditors, with opportunities to ask questions.
- AGMs require at least 21 days’ notice unless otherwise specified.
Tips for Businesses
If your company’s constitution requires an AGM, ensure proper notice is given, and shareholders have the opportunity to participate fully. This includes allowing questions on financial reports and management. Consider professional legal advice to ensure compliance with Corporations Act requirements.
An annual general meeting (AGM) is a yearly meeting of a company’s shareholders or members. The purpose of an AGM is to review a company’s performance, ask senior management questions, and vote on important decisions. Under the Corporations Act, a public company is legally obliged to hold an AGM at least once a year within five months after the end of its financial year. Usually, this occurs in October or November. Although a private company is not legally required to hold an AGM, its corporate governance documents will likely require AGMs to be held at least annually, if not more frequently. This article provides a guide to AGMS, explaining the key rules governing AGMs under the Corporations Act. Importantly, a company’s constitution will set out rules around how you should conduct an AGM. Thus, it is essential to consult the constitution to understand your company’s specific AGM requirements.
Who Attends an AGM?
The key attendees of an AGM include:
- the company’s directors;
- the company secretary;
- senior executives;
- shareholders;
- any candidates for director;
- legal representatives;
- external experts; and
- the external auditor.
For listed companies, the auditor must attend the AGM if the auditor is an individual. If they cannot attend, they must arrange for a suitably qualified audit team member to participate in their place. Additionally, the auditor must have conducted the audit and be able to answer questions about the audit. The same rules apply if the auditor is a firm or company.
Notice required for an AGM
The notice requirements for holding an AGM are set out in the Corporations Act and apply to all companies regardless of their constitution. Before an AGM can occur, a company must provide at least 21 days’ notice to its shareholders unless its constitution specifies a longer notice period.
While calling an AGM on shorter notice is possible, it requires all members’ unanimous consent. If, at the AGM, there is a motion to remove a director or auditor, then a shorter notice period is not permitted.
The notice must state:
- the place, date and time for the AGM;
- the general nature of the meeting’s business; and
- any special resolutions to be proposed at the meeting.
If shareholders are entitled to appoint a proxy under the company constitution, then the notice should also inform them of that right.
Continue reading this article below the formThe Business of an AGM
There are certain matters that a company’s AGM will address and, therefore, do not require mention in the meeting notice. These include:
- consideration of the company’s annual financial report, directors’ report and auditor’s report;
- the election of company directors;
- the appointment of the auditor and fixing their remuneration; and
- voting on the adoption of the remuneration report.
Instead of simply presenting these reports and holding votes, the AGM chair must also allow a reasonable opportunity for the shareholders to ask questions about or comment on the company’s management. If the auditor is present, shareholders should also have the opportunity to ask them questions relating to the following:
- conduct of the audit;
- audit report;
- accounting policies used in preparing financial statements; and
- independence of the auditor.
For listed companies, the chair must also allow the shareholders to ask questions about or comment on the remuneration report.
If you are a company director, complying with directors’ duties are core to adhering to corporate governance laws.
This guide will help you understand the directors’ duties that apply to you within the Australian corporate law framework.
How are AGMs held?
The Corporations Act allows for fully in-person, virtual or hybrid meetings. Regarding the latter two, virtual technology is used to enable participation. In a virtual-only meeting, attendance is exclusively through online platforms, with no option for physical presence. On the other hand, a hybrid meeting combines virtual access with one or more physical locations, allowing members to choose between in-person attendance or remote participation via digital means.
Virtual Meeting
Companies may conduct a fully virtual meeting only if their constitutional documents explicitly allow it. The company’s constitution must include provisions permitting virtual meetings either when the scheme was established or through a special resolution passed by the members.
Hybrid Meeting
Additionally, companies can conduct hybrid meetings, regardless of whether their constitutional documents explicitly provide for such arrangements. Under the Corporations Act, a member who attends the meeting (whether at a physical venue or by using virtual meeting technology) is taken for all purposes to be present in person at the meeting while so attending.
Virtual or Hybrid Meeting Requirements
In general, for both hybrid and virtual-only meetings, companies must ensure fair participation opportunities for all members. This involves scheduling the meeting at a suitable time and using appropriate virtual technology when applicable. Furthermore, organisations must enable members attending virtually to exercise their rights fully, including asking questions and providing comments, both orally and in writing, just as they would in a physical meeting.
Changes to AGMS in 2023
As AGMs occur annually, there are often a number of topics introduced to companies throughout the year that are discussed at the next AGM. Some topics that are increasingly discussed and reported include environmental, social, and governance (ESG) and cybersecurity.
Environmental, Social and Governance (ESG) Reporting
A focus on ESG issues, including climate change risk, environmental sustainability, modern slavery, and cybersecurity, are emerging as frequently raised ESG issues. Government initiatives are gaining momentum and requiring larger organisations to include climate change action plans in their governing documents and provide reports in certain sectors. Organisations of all sizes are exploring opportunities such as B-Corp Certification to demonstrate their ESG compliance, attract customers and maintain partnerships.
Cyber Security Reporting
Although cyber security falls under ESG, this area is particularly under the spotlight due to increased global hacking and data breach reports. ESG governance requirements extend to Cybersecurity as investors, shareholders, and employees increasingly demand that companies and their officers disclose information about cybersecurity risks and incidents.
What should you do to prepare for an AGM?
How will the AGM be held?
Since companies can now hold fully in-person, virtual, or hybrid meetings, depending on their constitutional documents, it’s important to decide in advance how the AGM will be held.
How will the AGM notice be sent?
Companies can electronically send a document relating to their AGM to shareholders. A company may give the notice of the meeting electronically by:
- giving the document to the person by electronic means – for example, via email; or
- using electronic or traditional means to provide shareholders with sufficient details to allow them to view or download the document electronically – for example, by sending an email with a link to download the notice of AGM or, where no email has been provided, via a letter sent by post.
Review the Share Register
We recommend that boards monitor the share register, preferably well before the AGM, to assist in preparation for any agenda items.
Prepare for Shareholder Questions
Prepare your chair and attending executives for questions on topical and other common questions. In particular, prepare detailed responses to any changes in the Company since the last meeting and plans for the next year.
Structure of Notice of Meeting and Resolutions
It is important to maintain a structure for the meeting, including a method for recording minutes. This structure will enable you to get through the agenda items and have time to clarify questions.
Key Takeaways
AGMs are a legal requirement for public companies, and private companies may also hold AGMs if their constitution requires it.
AGM attendees include the company’s directors, shareholders, senior management, company secretaries, senior management, legal representatives, and auditors. Companies must give shareholders at least 21 days’ notice before an AGM. Further, the AGM chair must also allow a reasonable opportunity for the shareholders to ask questions about or comment on the company’s management, the auditor’s report and (in the case of listed companies) the remuneration report.
Companies considering holding a fully virtual AGM should review whether their constitution allows them to do so and, if not, consider a resolution to amend the constitution to allow virtual-only meetings in future years.
If you are planning your first AGM or require more information, our experienced business lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
A proxy is a person attending and voting for another shareholder who cannot be present. You should refer to the company constitution to determine whether you can use a proxy.
This refers to the minimum number of people who must be present for the AGM to proceed.
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