DEFINITION of Information Circular

An information circular is a document for a company’s shareholders, outlining important matters on the agenda at the annual shareholders' meeting, or at a special shareholders' meeting. The information circular also solicits proxy votes and provides procedures for voting on key issues.

Some call an information circular a "Management Information Circular," a "Notice of Annual Meeting of Stockholders," or a "Notice of Special Meeting of Stockholders."

BREAKING DOWN Information Circular

The information circular may cover matters such as the election of the Board of Directors, possible mergers and acquisitions, or the need for new financing. This document acts as a "heads up" to shareholders planning to attend the annual meeting, preparing them to discuss major issues and cast their votes on the direction of the company. It also provides key information to shareholders who won't be attending the annual meeting.

In May 2018, Brookfield Asset Management distributed an information circular ahead of its annual shareholders’ meeting. Key items to discuss were:

  • The firm’s consolidated financial statements for the fiscal year ended December 31, 2017 (including the external auditor’s report)
  • The election of new directors, who will serve for a one-year term
  • The appointment of a new external auditor to also serve a one-year term and the compensation for this role
  • The consideration and the potential passing of an advisory resolution on executive compensation
  • The consideration and the potential passing of an amendment to the Corporation’s current Escrowed Stock Plan

Information Circular and Annual Shareholders’ Meeting

For larger companies, the annual shareholders meeting is typically the only time during the year when shareholders and executives interact. Many states require both public and private companies to hold annual shareholders meeting (also called annual general meetings or AGMs) although the rules tend to be more stringent for publicly traded companies. If a company needs to resolve a problem between annual general meetings, it may call an extraordinary general meeting.

The information circular is critical in prepping shareholders on points to be discussed.

There are provisions that detail how far in advance shareholders must receive notice of where and when the AGM will take place and how to vote by proxy.

In most jurisdictions, the AGM must discuss the following items by law:

  • Minutes of the previous year’s AGM (which must be presented and approved)
  • Annual financial statements (which are presented to shareholders for approval)
  • Ratification of directors’ actions (in which shareholders approve the board of directors’ decisions from the previous year, often including the payment of dividends)
  • Election of the board of directors for the upcoming year