What Is an Annual General Meeting (AGM)?

An annual general meeting (AGM) is a mandatory yearly gathering of a company's interested shareholders. At an AGM, the directors of the company present an annual report containing information for shareholders about the company's performance and strategy.

Shareholders with voting rights vote on current issues, such as appointments to the company's board of directors, executive compensation, dividend payments, and the selection of auditors.

If a company needs to resolve a problem between annual general meetings, it may call an extraordinary general meeting.

How an Annual General Meeting Works

An annual general meeting, or annual shareholder meeting, is primarily held to allow shareholders to vote on both company issues and the selection of the company's board of directors. In large companies, this meeting is typically the only time during the year when shareholders and executives interact.

Key Takeaways

  • Shareholders who do not attend the meeting in person may usually vote by proxy, which can be done online or by mail. 
  • At an AGM, there is often a time set aside for shareholders to ask questions to the directors of the company.
  • Activist shareholders may use an AGM as an opportunity to express their concerns.

The exact rules governing an AGM vary according to jurisdiction. As outlined by many states in their laws of incorporation, both public and private companies must hold AGMs, though the rules tend to be more stringent for publicly traded companies.

Public companies must file annual proxy statements, known as Form DEF 14A, with the Securities and Exchange Commission (SEC). The filing will specify the date, time, and location of the annual meeting, as well as executive compensation and any material matters of the company concerning shareholder voting and nominated directors.

Qualifications for an Annual General Meeting

The corporate bylaws that govern a company, along with its jurisdiction, memorandum, and articles of association, contain the rules governing an AGM. For example, there are provisions detailing how far in advance shareholders must be notified of where and when an AGM will be held and how to vote by proxy. In most jurisdictions, the following items, by law, must be discussed at an AGM:

  • Minutes of the previous meeting: The minutes of the previous year's AGM must be presented and approved.
  • Financial statements: The company presents its annual financial statements to its shareholders for approval.
  • Ratification of director's actions: The shareholders approve and ratify (or not) the decisions made by the board of directors over the previous year. This often includes the payment of a dividend.
  • Election of the board of directors: The shareholders elect the board of directors for the upcoming year.

Special Considerations

Several other elements may be added to an AGM agenda. Often, the company's directors and executives use an AGM as their opportunity to share their vision of the company's future with the shareholders. For example, at the AGM for Berkshire Hathaway, Warren Buffett delivers long speeches on his views of the company and the economy as a whole.

The annual gathering has become so popular that it is attended by tens of thousands of people each year, and it's been dubbed the "Woodstock for Capitalists."