What are the Requirements of an Annual General Meeting?

Public limited companies (PLCs) in the UK must hold an annual general meeting (AGM) each year. In contrast, private limited companies only need to do so if specified in their Articles of Association (Articles). For PLCs, the AGM gives shareholders a formal opportunity to review the company’s performance and vote on important governance matters. For private companies with an AGM requirement, it serves a similar purpose of shareholder participation and oversight. Failing to hold a valid AGM when required as a company director or secretary risks breaching your legal duties. This article will explain what an AGM is when to have one, what business should be covered, and the key procedural requirements to comply with under UK company law.

What is an Annual General Meeting?

An AGM is a yearly meeting of a company’s shareholders. It is a legal requirement for UK public limited companies and, depending on their articles, optional for private limited companies.

The core purposes of an AGM are to:

• elect or re-elect directors to the board;
• receive and consider the company’s annual accounts and reports;
• appoint an auditor (if required) and authorise their remuneration; and
• approve any other business specified in the meeting notice.

AGMs allow shareholders to participate in key decision-making and hold the board accountable for its governance and stewardship. Shareholders can scrutinise management, vote on resolutions, and ask questions about the company’s affairs.

When Must an AGM Be Held?

Public companies must hold an AGM each year within 6 months of their accounting reference date. For example, if their financial year ends on 31 December, the AGM must occur by 30 June.

What Business is Covered?

While AGMs cover mandatory agenda items like approving accounts and appointing auditors, they also provide a forum for shareholders to exercise key controls.

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Everyday AGM business includes:

• presenting the annual report, auditor’s report and approving accounts;
• electing new directors or re-appointing existing ones;
• approving directors’ remuneration policy and report;
• authorising donations or expenditures;
• approving dividends or capitalisation of profits; 
• renewing authority for share buybacks or disapplication of pre-emption rights; and
• voting on any member proposals or special resolutions.

Only resolutions or business matters properly notified in advance can be raised and voted upon at the AGM.

Notice Requirements

In accordance with the Companies Act, companies must give all members entitled to attend at least 21 clear days’ written notice of the AGM date. Notice periods are longer for resolutions requiring special notice.

The notice should clearly state:

• the date, time and location of the meeting;
• if any virtual/hybrid facilities will be provided;
• the resolutions to be proposed with explanatory notes; and
• voting procedures and rights (including proxies).

Holding Virtual or Hybrid AGMs

During the COVID-19 pandemic, temporary laws allowed AGMs to be held virtually using video conferencing and online facilities with no physical venue required. While this emergency relief has expired, the Corporate Insolvency and Governance Act 2020 gave companies greater flexibility to hold hybrid AGMs. These involve both a physical in-person meeting and online virtual facilities. All members must be allowed to participate virtually, including voting electronically. Detailed provisions for security, identification, and record-keeping apply.

Quorum Requirements

For an AGM to be valid and able to conduct business, a minimum number of voting members (a quorum) must be present. The required quorum is set out in the company’s Articles. For public companies, a quorum is two qualifying persons present unless the Articles specify a higher number. The model articles stipulate a quorum of 2 qualifying persons for private companies unless the company amends this. Some Articles require a majority of voting shares to be represented.

The company’s Articles will set out the requirements for adjourning and reconvening the meeting if a quorum isn’t present. For a public company whose shares are admitted to trading on a regulated market, if a meeting is adjourned because a quorum isn’t present, the rescheduled meeting must be held at least 10 days after the original meeting. No business can be dealt with at the adjourned meeting if the general nature of the company was not stated in the notice of the original meeting. 

Key Takeaways

Public companies in the UK must hold an AGM within 6 months of the end of their accounting year. Private companies generally only need to have one if required by their Articles. Key AGM business includes approving annual accounts, appointing auditors, electing directors, and voting on any proposed resolutions notified in advance.

At least 21 days’ clear notice is required stating the date, venue, resolutions, and accounts/reports. Hybrid virtual meeting options are permitted. As per the company’s articles, a valid quorum must be present. Otherwise, the AGM is adjourned and rescheduled. Follow all procedural rules carefully, or you risk penalties for non-compliance.

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