What is an Annual General Meeting?

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What is an Annual General Meeting?

An Annual General Meeting or AGM as it is prevalently known among the investors is meeting held once a year by a corporation inviting all the shareholders as well as the organization or people who are in a fiduciary relationship with the company. The meeting is mandatorily be conducted on an annual basis.

The example of such persons who are in the fiduciary relationship with the organization is its auditors as well as the legal councils. Typically, a notice for an AGM is served to the shareholders at least 28 clear days prior to the date of an AGM along with an Annual Report and an agenda as well as a proxy form. A proxy is allowed to attend the meeting in the place of the shareholders in case the shareholder himself is unable to attend the AGM. An AGM is a platform at which the company presents its operational and financial performance achieved in the past fiscal in front of its shareholders. Conversely, it also provides the shareholders ample opportunities to put their concerns regarding the way the company is being operated & managed as well as the various resolutions which are to be implemented further are to be approved from the shareholders for them to take effect.

There are typically two forms of activities which are performed at the AGM, i.e., One- Ordinary activities and the second the extraordinary activities. Ordinary activities are those activities which are of common in nature and doesn’t require any special resolution to take them further. Various examples of ordinary activities are – adoption of financial accounts for the past financial Year, reappointment of directors and auditors, advisory resolution to approve executive compensation, etc. Extraordinary activities may involve a resolution concerning capital raising, a buyback proposal, etc.

One of the highly discussed aspects of an AGM has always remained as the declaration of final dividends as the same is approved by the shareholders at an AGM. The Board of Directors of the company reserves the rights to recommend a dividend at the AGM however the same has to be approved by the shareholders at the AGM. The shareholders cannot pressurize the Board to recommend a higher rate of dividend as the authority for the same solely lies with the Board; however, the shareholders can ratify a proposal for the lower rate of dividend as already been recommended by the Board.

It is mandatory for both public as well as the private company to hold the AGM annually. The resolutions, as well as various other documents concerning the AGM, are to be filed with the regulator in accordance with the regulations prescribed.

The management & the Board of Directors profoundly use this meeting to share their vision and growth initiatives which they are planning and thus engage in a very constructive interaction with the stakeholders, that leads to generation of various innovative ideas which at times also culminate into such proposals providing strategic direction to the company’s long-term vision and objectives.

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