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annual general meeting
June 15, 2023
Do you ever wonder why Singapore companies conduct annual general meetings?
There is more to an annual general meeting (AGM) than reporting on a business’s activities and financial situation from the previous year. From fulfilling legal obligations to providing a platform for shareholders to come together to discuss integral matters related to the company, all this happens during the annual general meeting. While the agenda and requirements for AGMs may vary, it has one goal: to better a company’s performance in all business aspects.
Learn more about the purpose of AGM in this article. Continue reading.
The Importance of Annual General Meetings
In Singapore, the purpose of conducting is mainly in compliance with the Singapore Companies Act and the company’s constitution. Holding AGMs serves as an essential event for companies to fulfil their legal obligations and provide a platform for shareholders to participate in the decision-making process. Here are some critical purposes of conducting an AGM in Singapore:
The annual general meeting is a crucial event for companies registered in Singapore. While it serves as a platform to communicate with shareholders, it also provides essential information about a company’s financial performance. All this happens during the AGM as companies present and discuss their financial statements, typically including the balance sheet, income statement, cash flow statement, and auditor’s report.
Moreover, shareholders could review these financial statements and ask questions about the company’s financial performance during the meeting. They can seek clarifications on specific line items, financial ratios, or any other aspects of the financial statements that may be of concern. This interaction allows shareholders to engage directly with the company’s management and make informed decisions about their investments.
Director’s Report and Audited Accounts
One of the key components of the annual general meeting in Singapore is the presentation of the annual report by the company’s directors. This report contains an in-depth overview of the company’s operations, financial performance, and prospects. These documents help shareholders get a good grasp of the company’s performance over the past year and where it is heading in the future.
The annual report typically includes various sections covering different aspects of the company’s activities, including the Chairman’s Statement, CEO/Management Discussion and Analysis, Financial Performance, Corporate Governance, and Future Outlook.
Election and Appointment of Directors
Shareholders have a significant role in shaping the composition and governance of the company. They observe this obligation during the annual general meeting by electing or re-electing directors to the board. This process is crucial because the board of directors has an integral role in the company’s operations, setting strategic direction and representing the interest of shareholders.
Furthermore, shareholders can vote on the appointment or re-election of directors, which is typically conducted through a formal voting process. The shareholders receive information about the candidates standing for election or re-election, including their qualifications, experience, and any relevant disclosures, allowing them to make informed decisions about the individuals who will represent their interests and make critical decisions on their behalf.
The directors’ election or re-election is conducted through proxy voting or show of hands. Proxy voting allows shareholders to appoint someone else to vote on their behalf. This mechanism enables shareholders who cannot attend the AGM in person to participate in the voting process.
The outcome of the voting process determines the elected or re-elected candidates to the board of directors. Shareholders’ votes are counted based on the number of shares they hold, giving more weight to shareholders with a larger stake in the company. The elected directors then assume their responsibilities and contribute to the company’s governance.
The annual general meeting is also the company’s opportunity to announce and declare dividends. These are the payments made to shareholders as a distribution of profits and a way for companies to share their financial success with shareholders and give them a return on their investment.
There is no other best occasion to communicate dividend policy to shareholders than the AGM. The dividend policy outlines the company’s approach to distributing profits. It may specify factors such as the frequency of dividend payments, the percentage of earnings allocated to dividends, and any criteria or conditions that need to be met for dividends to be declared.
The company’s management or board of directors typically presents information about the dividend policy, explaining the rationale behind the decision and providing insights into the company’s financial position and future cash flow expectations. This information helps shareholders understand the factors considered when determining the dividend amount. It enables them to evaluate the potential returns on their investments.
Once the dividend announcement is made during the AGM, shareholders receive information about the specific dividend payment. This includes details such as the dividend per share, the total amount to be distributed, the record date (the date on which shareholders must be registered to be eligible for the dividend), and the payment date (when the dividend will be disbursed).
Approval of Financial Statements and Reports
Shareholders hold a significant level of authority and responsibility in ensuring transparency and compliance within the company. One of the key aspects of this responsibility is the approval of financial statements, directors’ reports, and audited accounts.
The directors’ report complements the financial statements, containing the balance sheet, income statement, and cash flow statement, by presenting an overview of the company’s operations, strategy, and significant events during the reporting period. The audited accounts are prepared by an independent auditor who examines the financial statements and provides an opinion on their accuracy and compliance with accounting standards.
After that, shareholders are presented with these financial statements, directors’ reports, and audited accounts for review and have the authority to approve or disapprove these documents, keeping in mind transparency and compliance with regulatory requirements. The approval process is done through voting.
Besides approval of financial statements and reports, the shareholders vote on various resolutions proposed by the company during the annual general meeting, like changes to the company’s constitution, the appointment of auditors, executive compensation, and significant business transactions.
Do You Want to Know More About Annual General Meeting?
Catch up with ContactOne today by calling these numbers: +65 6333 0633 and +65 8666 3633. If you reach out today, we can discuss everything you want to know about AGM in Singapore, including how to plan your annual general meeting agenda better. We look forward to hearing from you.
September 28, 2022
Do you know enterprises in Singapore mandatorily hold an annual meeting to update their stakeholders on the business’s health? This meeting is called the Annual General Meeting (AGM), wherein the company presents comprehensive financial statements to shareholders. And in return, they are given the opportunity to ask various questions regarding the company’s performance over the past year.
During the AGM, shareholders also make crucial decisions for the company, including appointing a director or removing one. Learn more about what AGM is all about and what happens during this business gathering that makes it vital to Singapore’s businesses. Continue reading below!
When is a Singapore-Registered Company Required to Hold Its AGM?
Before we dig deeper into the importance of AGM, let’s get to know when a company should hold one. As mentioned earlier, AGM is mandatory, and every Singapore-registered business is required to carry it out annually. However, some companies might be exempted, given certain considerations. Unless the company has dispensed with the hold of an AGM, public-listed businesses must hold AGM within four months after their financial year end (FYE), while non-listed businesses have to organise the annual meeting within six months after their FYE.
The FYE date is the company’s deemed FYE anniversary previously confirmed by the registrar. If there’s no notification from the registrar regarding the FYE date, it is assumed to fall on the company’s incorporation date anniversary. Learn more about determining a company’s FYE by directly reaching out to the appropriate office. This is the best way to address all concerns possible.
Important Considerations Before an AGM Takes Place
Now that the definition of AGM and when to hold one has been tackled briefly above, let’s take a closer look at the things to take note of when conducting an annual business meeting attended by company shareholders. Stick around and jot down some key points to ponder!
Dealing with Resolutions
As defined by the company articles, the common resolutions in an ordinary business include appointment of auditors or directors, distribution of dividends, remuneration for senior directors and executives, and presentation of financial statements for the year. The meeting needs to deal with resolutions according to the notice. Thus, other than ordinary businesses, the resolutions are in the AGM’s notice.
It is necessary to note that the members are entitled to propose any resolution for the meeting as long as it is not previously mentioned in the notice.
Meeting the Quorum
Besides keeping company shareholders updated on business performance, AGM is also the time to meet the quorum. It refers to the minimum number of attendees to proceed with the meeting. If the attendees do not reach quorum, the AGM will be invalid. However, when a quorum is unconstitutional, two members or proxies are allowed to go on with the AGM.
Ensuring Proper Appointment of Proxies
When a member cannot attend the AGM, a proxy can act on behalf of that member. But appointing a proxy takes a proper process to make it valid. With a proxy, a member can be replaced during the meeting. The proxy may also vote with the member’s best interest on top of the priority ladder.
Appointing a proxy by an AGM member should be in the company’s constitution. Other than the AGM, this constitution applies to most of the meetings or the current one. The only assurance a proxy can have is to follow the constitutional procedure.
Preparing Proper Financial Accounts
During the meeting, the directors will present the following documents: the director’s report, balance sheet and profit or loss statements, auditor’s report, and notes on the financial statements. It is important to have these presentations ready before the AGM takes place. On the other hand, prepare copies of these documents to be given to the member with the notice of AGM at least fourteen days before the actual meeting.
Upholding Proper Resolutions Voting
Every member has the right to vote, reinforced by the company’s constitution. On the contrary, a member is exempted from the right to vote when the company sends notifications, denies the member’s right to vote, and when the member has unpaid shares. The members use polls or raise their hands to vote, but proxies are not always allowed to do the same unless the company’s constitution permits them to do so.
Closing the AGM
The company secretary is obligated to document what has been discussed in the meeting through the meeting minutes. As soon as the chairman signs the minutes, the meeting is ended. After that, the secretary will file the document for safekeeping and future reference.
That concludes the list of considerations when holding an AGM for a company. A meeting as vital as this requires thorough preparation and proper procedures. As an enterprise in Singapore, it is essential to go above and beyond to make the annual general meeting successful.
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