At this time of year, most listed companies release their Annual Reports and announce the date of their Annual General Meeting. As a shareholder, or owner of the company, it is an opportunity to hear from directors, ask questions about the company and have a say about who leads and governs the company.
An Annual General Meeting is a meeting of shareholders (or members) of a company held annually under the Companies Act 1997. At the Annual General Meeting, the companies’ annual financial statements are presented, and the regular business is conducted, which will be discussed below.
The Annual General Meeting is held once each year and no later than 6 months after the end of the financial year, called the balance date. That is, for companies with a balance date of 31 December, the AGM is expected to be held no later than the following June. For companies with a balance date of 30 June, the AGM is expected to be held no later than December.
The company must specify the manner of coordinating the AGM. This is done through a Notice of Meeting. The Notice of Meeting will specify the date, time and venue of the meeting. If the company is to hold an on-line virtual meeting, a meeting link will be provided with instructions how to join the meeting. The notice will also include the meeting Agenda.
The meeting agenda usually includes:
- Welcome and apologies
- Minutes of the previous meeting
- Chairman’s report
- CEO/ MDs report
- Presentation of the Financial statements
- Constitution amendments (if any)
- Election of Directors
- Appointment of the Auditor for the next financial year.
- Any other business.
The Notice of Meeting is accompanied by an explanatory note and a proxy form.
The explanatory note adds explanations, comments, or other additional information relating to the main items on the agenda. This is intended to help shareholders understand the main content of the meeting.
The proxy form is a document which allows a shareholder to vote if they cannot attend the meeting in person. It allows a registered shareholder of a company to appoint another person (the proxy) to attend the AGM and vote on the shareholder’s behalf. The proxy form must provide for the proxy to be appointed by the shareholder and to direct the proxy how to vote for or against each resolution.
Who attends the AGM?
Attendees to the AGM would include the directors of the company, senior management, some employees, registered shareholders, and any invited guests.
Only those shareholders who have voting rights will vote at the AGM. A proxy may vote at the AGM on the shareholders’ behalf. To have voting rights you must be registered as a shareholder by the time determined under the Companies Act 1997 as the time for deciding who held securities for the purpose of the meeting.
There are 2 ways in which voting may be conducted at an AGM – on a show of hands or on a poll. On a show of hands each shareholder has one vote. On a poll, a shareholder will have one vote for each share they hold. Most matters are dealt with on a show of hands unless the Chairman calls for a poll.
The Meeting Agenda
Annual Financial Report
The Annual Financial Report is presented to the shareholders. The Annual Financial Report will have been audited by an independent auditor.
Appointment of the Auditor
Each company has an independent accountant to audit the accounts of the reporting period to ensure their accuracy. The audited accounts are signed off by the board of directors before presentation at the AGM.
The board puts forward a recommendation to confirm the appointment of the auditor at the AGM or appoint a new accounting firm for the next financial year.
The appointment of auditor is renewed annually.
Appointment of Directors
Perhaps the most important function of the AGM is the appointment of directors to the Board. The directors are the people who govern the company, oversee management and are accountable to shareholders.
Under the Listing Rules (available on the PNGX website), a director must not hold office (without re-election) past the third AGM following the director’s appointment or 3 years, whichever is longer. However, a director appointed to fill a casual vacancy or as an addition to the board must not hold office (without re-election) past the next AGM.
The appointment of directors is important because they are the elected representatives of the shareholders. The AGM provides an opportunity for shareholders to ask them questions about the company and for shareholders to hold them accountable for company performance. It is important that shareholders take the opportunity to elect directors who have the best skills and integrity to lead the company.
The information in this article is general in nature and you should take care to inform yourself about the specific characteristics of a particular investment before making a decision to invest in it. PNGX recommends discussing your investment objectives and needs with a stockbroker or qualified financial adviser. In PNG, you can either contact JMP Securities Limited or Kina Securities Limited.
By following these articles and reading more information available on the PNGX website (www.pngx.com.pg) you can build your wealth and invest in PNG
