Table of Contents
An Annual General Meeting (AGM) is a crucial event for any company. It allows shareholders to discuss the company’s performance and future plans, make important decisions, and address any issues. In the UK, AGMs are governed by specific regulations to ensure transparency, accountability and the proper functioning of corporate governance. This article delves into the requirements of an AGM in the UK to help you achieve legal compliance and effectiveness.
Legal Framework
The primary legislation governing AGMs in the UK is the Companies Act 2006. This Act outlines companies’ obligations regarding the holding, conducting, and reporting of AGMs.
Additionally, the Articles of Association of a company may impose further requirements. These additional requirements may include:
- quorum requirements;
- voting procedures; and
- notice periods.
Notice of the AGM
Proper notice is a critical requirement for an AGM. The Companies Act 2006 mandates specific guidelines on the issuance of notice, which include some of the following points:
Timing
Public companies must give at least 21 clear days’ notice, while private companies must give at least 13 clear days’ notice unless the Articles of Association specify a longer period.
Content
The notice must include:
- date, time, and location of the meeting;
- the agenda, including all likely resolutions;
- information on how shareholders can appoint proxies; and
- Explanatory notes for any special business.
Delivery
The company must provide notice to all shareholders, directors and the company’s auditors.
Notices can be delivered electronically if shareholders have consented to receive communications in this matter.
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Agenda and Resolutions
The AGM agenda typically includes both ordinary and special resolutions.
Ordinary Resolutions
Ordinary resolutions require a simple majority (more than 50%).
Common ordinary resolutions include:
- approval of the annual report and accounts;
- declaration of dividends;
- re-election of directors; and
- Appointment and remuneration of auditors.
Special Resolutions
Special resolutions require a supermajority (of at least 75%) to pass. These are typically used for significant decisions, such as:
- amendments to the Articles of Association;
- authorising the issuance of new shares; and
- approving substantial property transactions.
Shareholder proposals
Shareholders holding at least 5% of the total voting rights, or at least 100 shareholders holding shares on which an average sum of not less than £100 per shareholder has been paid up, can propose resolutions for discussion at the AGM. They must put forward such proposals at least six weeks before the AGM.
Quorum
A quorum is the minimum number of members required to be present for the AGM to be valid. The Articles of Association usually outline specific quorum requirements.
In the absence of specific provisions, the default requirements are:
- public companies must have two members present in person or by proxy; and
- private companies must have one member present in person or by proxy.
When you incorporate a company in England and Wales, you must maintain a number of company registers at its registered office or at the Companies House. This template includes these company registers.
Conducting the AGM
Chairperson
The chairperson of the AGM is typically the company’s chairperson of the board. If they are unavailable, the Articles of Association may outline an alternative procedure for appointing a chairperson for the meeting.
Minutes
The company must record accurate minutes to provide an official record of the proceedings. These minutes should include:
- details of the resolutions passed;
- results of voting; and
- discussions held.
Voting
Voting can be conducted by either a show of hands or a poll.
Shareholders who cannot attend the AGM can appoint a proxy to vote on their behalf. Individuals can nominate a proxy for a single meeting or indefinitely. The notice of the AGM must include instructions on how to appoint a proxy.
Post-Meeting Reporting
Following the AGM, companies must:
- file resolutions passed at the AGM with Companies House, particularly special resolutions and any changes to the Articles of Association;
- update the company’s register of members to reflect any changes; and
- communicate the outcomes of the AGM to shareholders.
Key Takeaways
The Annual General Meeting is a cornerstone of corporate governance in the UK, providing a platform for shareholders to exercise their rights and for the company to demonstrate accountability.
Compliance with the legal requirements outlined in the Companies Act 2006 and the company’s Articles of Association is essential. By following best practices and ensuring clear communication and engagement, companies can make their AGMs effective and valuable for all stakeholders involved.
If you need legal assistance holding annual general meetings, LegalVision’s experienced corporate lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
A public company should call an AGM each year within six months of the day following its accounting reference date. A private company may have provisions in its Articles of Association requiring an AGM but, if not, can call one voluntarily.
An AGM requires 14 clear days’ notice for a non-traded company. Traded companies require 21 clear days’ notice, although public companies subject to the UK Corporate Governance Code must provide 20 working days’ notice.
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