While an Annual General Meeting (AGM) only occurs once a year, they’re an avenue for stakeholders to directly engage with the Board to ask the hard-hitting questions and make resolutions. The problem is that they seem to occur only once a year… I suppose that’s why they call them ‘annual’?
Anyway, the fallout appears to be that because they occur so infrequently, the people running them tend to be a bit rusty on what’s required and how best to achieve a successful meeting.
As an external company auditor, I have easily attended 100 AGM’s during the past six-year period, so it’s fair to say that I’ve seen the good, the bad and the ugly! Indeed, it often feels awkward at these meetings as everyone stumbles around not really knowing what to do or say.
For many CFO’s the role of Company Secretary can be a logical additional responsibility especially given the central role a CFO plays between the Board, executive management and share registry.
Therefore, with the AGM season around the corner, I feel it’s my professional, civic and ethical responsibility to provide good governance advice to give you practical tips to successfully running an AGM.
In this two-part series I’ll first delve into getting the planning right. Then, in part-two I’ll discuss running the meeting, including order of the meeting, voting and how to handle potential crisis.
Mitigating against the bad and the ugly
There are two types of meetings, those that are well planned and those that aren’t. when it comes to the AGM, whether it’s for an incorporated association, an unlisted public company (which includes many sporting, cultural, educational and charity groups) or for a listed public company, the following are the common planning features of AGM’s that can all be addressed in a similar manner, so your AGM is a success.
1). Planning takes one year!
Immediately following an AGM, determine what can be improved, or indeed avoided for the next AGM with a thorough debrief. Reviewing in this way will ensure the next AGM and potential issues are flagged ahead of schedule and can be carefully planned for at the next annual meeting. This should be conducted with the Chair, the Company Secretary/CFO, a Non-Executive Director and a stakeholder and/or member of the executive management.
While the venue might seem like a peripheral aspect, it’s critical to ensure that the business of the meeting can be appropriately discussed and resolved. You must consider previous AGM’s to get the right size room and facilities. Consult widely to get the best results – experience is a key determinant in knowing the type of venue required, size, quality, multimedia facilities, parking etc.
3). Notice of meeting
The notice of meeting, including agenda, explanatory memoranda and normally the audited financial report are sent a specified period before the AGM – normally 21 days or 28 days before hand (noting the requirement for extra days to account for mail delivery). Given the technology revolution we are experiencing, the question you should ask is whether the notices can be emailed and/or the information to be sent can be made available on your website? The time and cost savings can be immense and for members, it should be a far easier way to access the information they require for the meeting. Check your Constitution, your governing legislation and consult with legal experts to maximise the benefits for your organisation.
4). Goodwill, marketing and PR
AGM’s are the one time of the year when members get the chance to openly communicate and liaise within Directors and management. Don’t waste this opportunity!! Consider this as a billboard opportunity to showcase your organisation at its best. Some companies provide members with ‘showbags’ of their products or will produce a ‘year in review,’ guest multimedia presentation highlighting the opportunities and future plans.
5). Co-ordination and rapport between Chairman and Company Secretary
This is the key relationship to holding a successful AGM. Think of the Chairman as the Lead Actor and the Company Secretary as the Film Director. They really must prepare together. Planning a list of any potential questions (including the curve-balls) with prepared responses, along with some key messages will ensure they’re ‘singing from the same song sheet.’ It’s also important to know your constitution and confide in your legal team on elections, communications and voting.
Be ready for unusual circumstances so that the Chairman doesn’t look like a goose or lose control of the meeting. If the CFO is not the Company Secretary, ensure that the CFO is in this inner circle to deal with the potential queries over the financial report. Every detail matters.
6). Share Registry
A share registry is engaged to manage large numbers of members. Normally, they would attend the meeting to register members and provide them with voting cards. They will also assist with proxy voting and overall counts per resolution. Their role is crucial, and they should work very closely with the Company Secretary to achieve a smooth running of the AGM.
7). External Auditors
Ensuring the auditor is aware of the AGM meeting time and venue and will be appropriately represented is crucial. External Auditors are often empowered to speak at AGMs. Indeed, under the Corporations Act listed company AGM’s must attend and answer relevant questions within the scope of their engagement as external auditor. It’s really surprising that so few questions are asked of auditors, especially when they are issuing enhanced long form audit reports, which detail key audit matters and how they were addressed for the audit.
Note that when accounts are tabled at the AGM, normally there is no requirement to “pass them” as they are typically endorsed by the Board and audited. The issue is questions which may arise from the financial report and this is where the CFO should be fully engaged and ready to provide the Chairman with specific knowledge before-hand and/or to liaise appropriately with the auditor to ensure the questions are well answered. If your planning is thorough, you will anticipate the questions and have excellent responses available for the Chairman to present.
Annual General Meetings present a time for the organisation to enhance their reputation and instil confidence in its members. By carefully planning each detail from the day after the last AGM, to the meeting, you can be assured that your AGM will be a worthwhile exercise. In the next part of the series, I’ll discuss the running the meeting.