What is Annual General Meeting (AGM)? | Definition, Aspects, Pros and Cons

The yearly mandatory gathering of the members of an organization or the shareholders of a company is known as the Annual General Meeting (AGM). The meetings are to be held according to the laws governing that particular organization, or the rules laid down by its constitution.

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Issues of general interest and business importance are usually the topics of discussion at these meetings. Important decisions affecting various branches of organizations are made, financial reports, progress reports, and committee reports are presented. This is primarily done for the benefit of the shareholders, who are addressed by the board of directors and are updated regarding the goings on.

Time is usually kept for questions to be asked and doubts to be cleared. Often important decisions regarding the appointment of persons are taken at these meetings. This is because the presence of all the shareholders makes it convenient to take their vote and arrive at a consensus.

Key Takeaways

  1. An Annual General Meeting (AGM) is a mandatory meeting held by a company or organization once a year, where shareholders or members come together to discuss and vote on important business matters.
  2. At an AGM, the company’s management presents its financial reports and other important information to shareholders or members, who then have the opportunity to ask questions and vote on resolutions.
  3. AGMs are an important part of corporate governance and help ensure that shareholders or members have a voice in the company’s decision-making process.

Other aspects of an AGM

The nature of the Annual General Meeting depends upon the particular business organization or company in question. Usually strict by laws are specified for when the meetings are to be held, and the proceedings are detailed out. There are always practices and aspects of such meetings unique to every company. The following are the common features of most such meetings:

  1. The meeting is seen as an opportunity of interaction between the shareholders and company executives. The shareholders are also typically asked to elect the board of directors for the upcoming financial year.
  2. The chairperson of the organization usually presides over the meeting and conducts its proceedings. The convening and smooth progress of the meeting is the secretary’s responsibility.
  3. The minutes of the last Annual General Meeting are always presented and discussed first. The minutes are usually read out by the secretary.
  4. The payment of dividends may also take place on this day. The shareholders/ members are usually of primary importance in these meetings. Hence their shared interests and profits are kept in mind.

Advantages of AGMs

  1. Annual General Meetings function as an accountability mechanism. The recorded historical records and common experience of these meetings indicate that the prospect of an upcoming meeting is key to the smooth and effective functioning of a business.
  2. An annual meeting of all the members of an organization allows a mixture and exchange of ideas, identification of weak zones, and is generally beneficial to progress.
  3. It is an important aspect of corporate governance as it brings to notice all the necessary changes required for growth in performance. It gives a vision for the future while evaluating present performance with respect to the previous AGM.

Disadvantages of AGMs

  1. Because of the sheer number of participants in the meeting, it may be difficult to steer the proceedings properly and remain on track. In the end it may not be as productive as it should have been.
  2. It is highly time consuming and it is difficult to hold attention spans for that long, despite breaks for refreshment.
References
  1. https://www.emerald.com/insight/content/doi/10.1108/14720701011035666/full/html
  2. https://journals.sagepub.com/doi/abs/10.1177/1032373208095479
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