An annual general meeting (AGM) is a mandatory yearly gathering of a company’s shareholders. In the U.S., every state requires publicly-traded companies incorporated within it to hold an annual general meeting of shareholders to elect the Board of Directors and transact other business requiring shareholder approval. Shareholders must be informed of where and when it will occur in a timely manner subject to a minimum notice period that varies by state. This is usually done via a proxy statement.
At an AGM, the directors of the company present an annual financial report containing information for shareholders about the company’s performance and strategy. Shareholders may ask questions of the board of directors and those with voting rights vote on current issues, such as
- appointments to the company’s board of directors
- executive compensation
- dividend payments
- selection of auditors
The AGM should not be confused with an Extraordinary General Meeting (EGM) a similar corporate function.
In the U.K., it became optional as of October 1, 2007 for any private company to hold an AGM, unless its articles of association specifically require it to do so.
Annual General Meeting Example
The exact rules governing an annual general meeting in the U.S. vary according to jurisdiction but are outlined by many states in their laws of incorporation. Both public and private companies must hold an AGM, although the rules are generally more strict for publicly traded companies. For instance, public companies must file annual proxy statements, such as this Form DEF 14A made by Navistar (NAV), with the Securities and Exchange Commission (SEC).
This filing specifies the date, time, and location of the annual meeting, as well as executive compensation and details the 3 the proposals that require a shareholder vote. Board recommendations and instructions on how to vote are given at the end of the document, including vote by proxy guidelines. In large companies, this meeting is typically the only time during the year when shareholders and executives interact. In light of the COVID-19 pandemic, it is becoming increasingly more common for companies to hold a Virtual General Meeting to adhere to social distancing guidelines.
