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An annual general meeting or 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 questions of senior management 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. While the law does not require private companies to hold AGMs, their constitution may require one. 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, including senior executives;
  • shareholders; 
  • the company secretary; 
  • any candidates for director; 
  • legal representatives; 
  • external experts; and 
  • the external auditor.

For listed companies, if the auditor is an individual, they must attend the AGM. If they cannot attend, they must arrange for a suitably qualified audit team member to participate in their place. Additionally, this individual must have conducted the audit and be able to answer questions about the audit. If the auditor is a firm or company, then the same rules apply.

Giving Notice of an AGM

Before an AGM can occur, a company must provide at least 21 days notice to its shareholders, unless the company’s constitution specifies a longer notice period. While it is possible to call an AGM on shorter notice, it requires all members’ unanimous consent to attend and vote at the AGM. If at the AGM, you or another person will move a resolution to remove a director or auditor, then a shorter notice period is not permitted.

You must give written notice to each shareholder entitled to vote at the AGM, each director and the auditor. This notice can be given personally, by mail or by electronic means (such as email).

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.

The 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 make comments on the management of the company. If the auditor is present, shareholders should also have the opportunity to ask them questions relating to the:

  • 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 make comments on the remuneration report.

COVID-19’s Impact on AGMs

Following the COVID-19 outbreak, the Treasurer implemented emergency changes to the Corporations Act, allowing companies to: 

  • give notice of AGMs via email; 
  • hold AGMs entirely by electronic means; and 
  • have a quorum of shareholders attending online.

Many corporations expected that Parliament would extend these temporary relief provisions beyond March 2021. However, Parliament did not pass the bill to extend these measures. Hence, you cannot hold AGMs via electronic means. Likewise, notice can only be given to members electronically if they have opted to receive correspondence electronically.

Fortunately, on 29 March 2021, ASIC announced a ‘no-action’ position relating to these rules. This means that ASIC will not enforce the requirement to hold a physical meeting for AGMs. Regardless of how you hold your AGM, it is essential that they still allow a reasonable opportunity for members to participate. ASIC has provided guidelines for the conduct of virtual meetings, which you can access here.

Key Takeaways

AGMs are a legal requirement for public companies. Private companies may also hold AGM if their constitution requires it. AGM attendees include the company’s directors, shareholders, senior management, company secretary, senior management, legal representatives, and auditor. Companies must provide at least 21 days’ notice to shareholders before an AGM. Further, the AGM chair must also allow a reasonable opportunity for the shareholders to ask questions about or make comments on the management of the company, the auditor’s report and (in the case of listed companies) the remuneration report. If you are planning your first AGM or require more information, contact LegalVision’s business structuring lawyers on 1300 544 755 or fill out the form on this page.

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