The Annual General Meeting (AGM) is the formal occasion at which the Board reports on the affairs and activities of the Company and the manner in which the Board has acted on behalf, and in the interests of the Company’s members. The AGM is an important event for every Company and it gives its members, other stakeholders, the general public and the community a broad overview of the organization’s current directions, financial health and confirms its purpose. It is a compulsory meeting based on the provisions of the Companies and Allied Matters Act (CAMA). It gives the members of the Company and other stakeholders a recurrent opportunity to meet to consider the progress and development of the Company, take necessary action to safeguard their various interests and promote those of the Company. It is also the time to revitalize the Company through the official engagement of members into key elected positions.
Whilst the Articles of the Company may make provisions on how the AGM of a Company should be conducted, to ensure that meetings of members are held at reasonable intervals irrespective of the provisions of the Articles, CAMA provides that a Company must hold a general meeting once in a year1.
The Corporate Affairs Commission (CAC) and other regulatory bodies would like to ensure that the AGM remains responsive to the needs of shareholders and other stakeholders in the company. Also, that the Company continues to serve its intended purposes, including providing a valuable forum to facilitate effective corporate governance and administration.
The business of an AGM
The business transacted at an AGM will be defined either as Ordinary business or Special business and in particular, all businesses transacted at an AGM shall be deemed special business except those mentioned below which are ordinary business.2
- Declaring a dividend
- Presentation of Financial Statement and the report of the directors and auditors
- Election of directors in the place of those retiring
- The appointment and fixing of the remuneration of the auditors
- The appointment of members of the audit committee.
The AGM serves various purposes in the general engagement process between company and its shareholders (other stakeholders inclusive) and is a mechanism for accountability of those in control of the company (directors) to the owners (shareholders). The AGM is a forum for:
- Reporting: The AGM informs shareholders of the various financial and other matters concerning the company, principally through consideration of the Annual Report3
- Questioning: It provides an opportunity for shareholders to ask questions or make comments on various matters most especially on the contents of the Annual Report including the management of the company, the remuneration of directors and other senior corporate officers and the conduct of the Company’s audit.
- Deliberating: To provide an opportunity for shareholders to discuss the matters on which they will be called to vote at the meeting.
- Succession: The rotation of directors/ election of new directors and auditors is a feature of AGM and it serves as a form of succession plan for the Company.
- Decision making: To enable shareholders vote on a limited range of matters, including: – The annual financial report, directors’ report and auditor’s report – The election of directors – The appointment of the auditor and the fixing of the auditor’s remuneration 4.
Issues to be considered by a Company Secretary When Preparing for an AGM.
Notice of the AGM must be sent to all company members, all directors and the auditors. Notice must be in writing and must either be posted to the 3 www. Cvsfife.org/publications/agm.html 4 www.companysecretary.com.au/articles/RoleCS.pdf member’s registered address or the address supplied by him to the Company for giving notice 5. The statutory period of notice for an AGM is 21 clear days from the date on which the notice was sent out unless all members entitled to attend and vote have agreed otherwise6 i.e. to a shorter notice.
Preparatory steps for an AGM
I. Confirm the date of the meeting with the board, registrars, advisers and others required to attend.
II. Estimate the number of attendees.
III. Prepare and send out notices of meeting, annual reports and proxy forms.
IV. Organise and book a suitable venue with sufficient accomodation and facilities including facilities for the disabled.
V. Prepare and discuss with the Chairman an order of proceedings, setting out the various resolutions to be passed at the meeting.
VI. Ensure that the Chairman is primed with a suitable script to deal with the meeting so that he (or she) is not taken completely by surprise.
VII. Arrange for all necessary presentation equipment to be available at the venue, including microphones to be used when questions are asked.
VIII. Ensures that the company organises catering and hospitality arrangements.
IX. Consider contingency plans and if necessary, book additional rooms or an alternative venue that can be used in the event that the main meeting room becomes full or unusable.
X. If a difficult meeting is anticipated, make appropriate security arrangements. For example, consider the layout of the meeting room and make sure there will be some distance between the board and the attendees.
XI. If necessary, employ a security organisation for the meeting taking into consideration the state of security in the Country.
The necessary items/ documents the company secretary should go to the annual general meeting (AGM) with.
a) Memorandum and Articles of Association of the Company.
b) The Companies and Allied Matters Act.
c) The Stock Exchange Code of Corporate Governance.
d) Financial Reporting Council Act.
e) Listing requirement of the NSE (Green Book)
f) Register of Members. This is required in case it is necessary for persons attending the meeting to be identified, to ensure only those entitled to attend are present and to determine those holding unpaid shares if a poll is demanded. 7
g) Register of Directors h) Record of Directors attendance at meetings
Items (c) to (e) are necessary in the case of a public quoted Company.
The role of the company secretary during an AGM
- The Company Secretary should ensure that there are directional signs designating areas for stakeholders to ensure that observers do not participate or disrupt the meeting.
- Directors should have time to interact with shareholders before the start of the formal proceedings of the meeting.
- The Company Secretary should assist the Chairman to quickly find answers to questions asked by the shareholders.
Obligations of a company secretary for annual general meeting in public listed companies.
- For public listed Companies, the date and venue of the AGM, dividend to be paid, notice of closure of register of members and transfer books are to be communicated to the Nigerian Stock Exchange (NSE) for approval.
- The notice of the AGM should be published in two (2) newspapers at least 21days before the meeting8.
- The Company Secretary should also note that the appointment of two or more directors of a public Company by one resolution is only possible when agreed to by all members without any objection and should assist the Chairman to ensure that the relevant resolution in this regard is passed. 9
- The Company Secretary should notify NSE 14 days before the board meeting to consider recommendation of dividend.
- Advise the Registrar to ensure that the register of the Company remains open for at least 21 days after the board resolution recommending payment of dividend.
- Advise the Registrar to ensure the closure of the Register for at least 5 working days to allow for settlement of transactions on the last day of business before closure of register.
- Ensure notice of closure is sent to NSE at least 14 days before closure.
- Ensure that the NSE approves printer’s proof of the Annual Report prior to circulation.
Voting at an annual general meeting (AGM)
Voting is effected by either a show of hands or poll and voting is ordinarily by a show of hands except a poll is demanded10. A vote on a show of hands enables a company deal with an issue there and then, thus it tends to be much quicker and can avoid unnecessary paperwork and extra cost. In a show of hands one shareholder is entitled to one vote. It can be quite easy for a small group to influence the outcome of a vote in a poorly attended AGM. For instance, a single interest group wanting to influence the outcome of a vote could do so by distributing a few shares between a number of individuals usually giving them just one share each. Such individuals can override shareholders who represent a much higher number of shares. A poll vote takes into account the number of shares that a shareholder has which have been fully paid up. In order to ensure the smooth running of a meeting, if a poll is demanded when carrying out a vote by show of hands, certain precautionary measures should be taken. The Company Secretary is to request and verify that the Registrars are prepared for the poll by producing poll cards and shareholders should be questioned before the meeting to see if there are any possible topics on which a poll may be demanded. The Chairman is to direct how a poll demanded should be conducted and he has a casting/deciding vote in case of equality of votes11.
A poll is often seen to be a more equitable method of voting as shareholders votes are counted according to the number of shares held. Votes cast are thus weighted based on their respective risk profile represented by their shareholding.
A demand for poll need not be in writing except the Articles of the Company requires it and the demand can be made at the meeting before or on the declaration of the result of the show of hands12
Who can demand a poll: The following people can demand a poll
I. The Chairman where he is a shareholder or a proxy
II. At least three members present in person or by proxy
III. Any member or members present in person or by proxy having not less than 10% of the total voting rights.
IV. Any member or members having 10% of total paid up shares conferring the right to vote at that meeting13.
Restriction on a poll
The right to demand a poll cannot be restricted by the articles of the Company14. However the articles may restrict poll on election of the chairman and the adjournment of meetings. A poll cannot be used for the election of members of the audit committee15. It is not compulsory that a member uses all his votes the same way.
In a vote by poll, shareholders votes are seen to be counted according to the number of paid up shares held and an exact and definitive result is obtained.
The drawbacks of poll votes includes the time and paper work involved. The voting cards must be distributed and collected and extra time taken to count the votes.
When a poll is demanded, the Company Secretary should as much as possible try to persuade a withdrawal of such demand if the relevant issue for which a demand is being made is not a serious one. This is to avoid waste of time when the purpose is just an expression of a shareholder’s dissatisfaction with the resolution of the meeting reached by a vote by show of hands or to disrupt the meeting.
The AGM, as it currently operates, is part of a range of avenues for shareholder interaction with the company. For instance, shareholders, through briefings or other communications or contacts with the company, may receive more detailed or up-to date financial or other information than is contained in the Annual Report. Other parties may take the view that the functions of an AGM should be reconsidered in some manner or the obligation to hold an AGM be abolished.
While the use of technology in conducting AGM is recognized in some jurisdictions e.g. in the United Kingdom, questions arise whether companies should be given greater latitude in this respect, including the use they might make of the Internet to hold the AGM16.
The Company Secretary at the end of an AGM should listen to the comments of stakeholders which could be noted for future action and further decision with the management. The Company should try to make the AGM a positive experience and appreciate the stakeholders for their participation, most importantly, for being firmly committed to the organisation and its goals.
By Damilola Ajulo
1 Section 213 CAMA 2 Section 214 CAMA 3 www. Cvsfife.org/publications/agm.html 4 www.companysecretary.com.au/articles/RoleCS.pdf 5 Section 220 CAMA 6 Section 217 CAMA 7 Conducting an effective Annual General Meeting by Bode Ayeku. 8 Section 222 CAMA 9 Section 261(1) CAMA. 10 Section 224 CAMA 11Section 226(2) and (3) 12 Section 224(1) 13 Opcit 14 Section 225(1) CAMA 15 Section 225(3)CAMA 16(https://www.icsaglobal.com/assets/files/pdfs/bookshop/Media%20room/Checklists/Checklist%20of%20the%20week% 2004.02.13.pdf)