Shareholder annual general meetings are a state law statutory requirement for both private and public companies. Annual meetings are a corporate governance mechanism that allows shareholders to be informed about the affairs of the company and exercise their rights to vote in the Board of Directors, the shareholders representatives, to run the company. Not to be confused with special meetings, which may be called for a specific purpose at any time, annual meetings are meant to create a dialogue between the shareholders and the board of directors — they are held yearly on a date fixed under the corporate bylaws.
What Happens at a Shareholder Annual General Meeting?
Shareholder annual general meetings are essential to ensure transparency and accountability in a company. They are administrative and follow a specific format that has been determined in advance. At the annual meeting, directors of the company present a report that has information for interested shareholders regarding the company’s strategy and performance during the previous year.
While the corporate bylaws of a company have the rules that govern an annual general meeting, these items must be discussed:
- The minutes of the prior year’s annual meeting — The minutes of the meeting from the year before must be presented and approved at each annual meeting.
- Financial statements — The company must present the annual financial statements for shareholder approval.
- Ratification of actions taken by the directors — Shareholders must approve and ratify decisions made by the board of directors during the past year, including any payments of dividends.
- Election of the board of directors — The shareholders must elect the board of directors for the following year.
- Various company matters — Shareholders can vote on a variety of company matters at the annual general meeting, such as those involving mergers and acquisitions. The company’s directors may also use the meeting to share their vision for the company with the shareholders.
If the company has not performed well, shareholders can question the board at the annual general meeting. In addition to demanding answers, shareholders can also ask about the strategies and measures that management plans to implement to improve performance.
What Happens if a Shareholder Cannot Attend the Annual General Meeting?
If a shareholder cannot be physically present at the annual general meeting, the shareholder may legally authorize someone else to act on their behalf. A shareholder may vote their shares by proxy or mail. All shareholders receive a “proxy statement” before the annual shareholder meeting which gives them the information necessary to make an informed vote on the matters that must be decided.
There are many rules and regulations associated with voting by proxy. Critically, a preliminary proxy, Form PRE 14A, must be filed with the Securities and Exchange Commission before the annual meeting is held. This document must be filed no fewer than ten calendar days prior to filing Form DEF 14A, the proxy in its final form. The Form PRE 14A includes information regarding the time and place of the shareholder meeting, the revocability of the proxy, financial statements, voting procedures, modification of securities, and the rights of dissenting shareholders to an appraisal.
Contact an Experienced New York Business Attorney
The rules, requirements, and regulations associated with a shareholder annual general meeting can be confusing to navigate. Offering skillful representation to shareholders, businesses, investors, and corporations, Brinen & Associates advises clients for a wide range of business issues, including those involving shareholder meetings, proxies, and compliance matters. Call (212) 330-8151 or send us a message to learn more about how we can assist you.