What you should know about Annual General Meetings

Since 2015 full year financial results were released by publicly listed companies, investors are now meeting various boards of directors and company executives.
An annual general meeting (AGM) is a mandatory, public yearly gathering of a publicly traded company’s executives (top management), directors (board members) and interested shareholders.
Activities at the AGM will, among others, include; electing a board, deciding on important matters regarding the organisation, and informing the members of previous and future activities. Here, members may ask questions regarding the projections of the business.

Decision making happens through voting by shareholders present. But their presence might be limited by various factors, for example; having more than one AGM scheduled at the same time and day. Here, proxy voting can do.
A proxy vote is a ballot cast by one person on behalf of another. To be able to vote by proxy, shareholders receive a proxy ballot in the mail along with an informational booklet called a proxy statement describing the issues to be voted on. Shareholders return a form by mail agreeing to have their vote cast by proxy. The person or entity you choose to cast your vote will then attend and vote on your behalf based on your advice or based on an Investment Policy Statement for institutions that have entrusted management of their investments with other entities.

Voting in AGMs: Shareholders should know how many votes they are entitled to. This is determined by the procedure of voting followed by the entity in which you are a shareholder. There are two procedures of voting in AGMs; Cumulative and statutory voting. Cumulative voting includes voting for a company’s directors where each shareholder is entitled to one vote per share multiplied by the number of directors to be elected. This type of voting improves minority shareholders’ chances of influencing voting outcomes. Statutory voting is a corporate voting procedure in which each shareholder is entitled to one vote per share and votes must be divided evenly among the candidates or issues being voted on.
Election of Board members: One of the most important decisions made by shareholders at AGMs is election of board members.

Board members have a duty to make decisions based on what is best for the long-term interests of shareholders. Some points to consider before electing board members include; independence, experience and access to both resources and accurate information. A majority of board members on a particular board should act independently from management. They should have appropriate experience and expertise, access to resources to hire external auditors and other outside consultants. They should be knowledgeable about the company’s financial position. Decisions at AGMs affect your investment’s performance. So, make them carefully.

Arthur Nsiko is a research analyst at African Alliance Uganda.