Annual General Meeting (AGM)
An Annual General Meeting (AGM) is a yearly gathering of a company’s management and shareholders. Mandated by the Company Act 2063, the AGM is essential for discussing the company's yearly financial reports, selecting auditors, appointing board directors, and addressing other significant matters. The company must adhere to the procedures outlined in the Company Act to conduct the AGM properly.
During the AGM, the company’s directors present the Annual Financial Report, which includes details about the company’s business performance and future strategies. Shareholders with voting rights participate in key decisions such as the election of the board of directors, selection of auditors, dividend payments, executive compensation, capital adjustments, and changes in company objectives. Shareholders who cannot attend the meeting in person may vote by proxy, either by appointing someone else to attend on their behalf or by mailing their vote.
When is an AGM held?
A public company must hold its first AGM within one year of commencing business and subsequently hold an AGM every year within six months after the end of its financial year. The company must notify shareholders of the meeting’s place, date, and agenda at least 21 days in advance and publish the AGM details in a national newspaper at least twice.
How does an AGM work?
The AGM serves several key purposes:
1. Presentation of Financial Performance: Management presents information on the company's financial health and key decisions.
2. Shareholder Consent: The company seeks shareholder approval for decisions beyond the board of directors' authority.
3. Forum for Discussion: It provides a platform for management and shareholders to discuss various issues.
Special General Meeting (SGM)
A Special General Meeting (SGM), also known as an Extraordinary General Meeting, is any meeting of shareholders held between two AGMs. The board of directors may call an SGM if necessary to pass special resolutions that cannot wait until the next AGM. Shareholders holding at least 10% of the company’s paid-up capital or at least 25% of the total number of shareholders can also demand an SGM.
When is an SGM held?
The company must notify shareholders at least 15 days in advance of an SGM. These meetings are convened to address specific matters required by law, regulations, or the Articles of Association to adopt special resolutions. Common issues discussed at SGMs include:
· Changes in Share Capital: Increasing, decreasing, or altering share capital.
· Corporate Changes: Modifications to the company’s name or objectives.
· Merger and Acquisition Issues: Matters related to the merger or acquisition of the company.
· Share Issues: Issuing shares, bonuses, rights, or buybacks.
· Company Conversion: Converting a private company to a public company, and other significant corporate actions.
Conclusion
AGMs and SGMs are critical components of corporate governance, ensuring transparency and providing a platform for shareholder engagement. AGMs are held annually to review the company’s performance and make key decisions, while SGMs are called as needed to address urgent or special matters. Both meetings are essential for maintaining good corporate practices and fostering communication between a company’s management and its shareholders.