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Annual general meeting (AGM) of shareholders

In a public limited (or joint-stock) company, the AGM is the highest authority. Its powers, which extend to audit, cannot be transferred. So what can the AGM do exactly, and how is it convened? The following blog post explains.

 

How is the AGM convened?

In this post, we will consider ordinary AGMs. By law, these must take place annually and within six months of the end of the business year. At least 20 days in advance, the administrative board issues invitations in the form provided for by the company’s constitution. This convocation must involve the administrative board providing notice of the issues to be discussed, the motions to be proposed by the board and any agenda items requested by the shareholders. With very few exceptions, unless appropriate notice has been provided of an issue to be discussed, that issue cannot be voted on.

AGM’s scope of remit

In a publicly limited (joint-stock) company, the AGM has the most basic and fundamental powers. Chief among these, and the most far-reaching, is the power to elect the administrative board and appoint auditors. The approval of the management report and group accounts are also among its principal responsibilities. It further has sole responsibility for signing off the annual accounts and for determining how any profits are used. By law, the AGM has the following non-transferable powers:

  1. Amendment of constitution
  2. Election of administrative board and appointment of auditor
  3. Approval of management report and group accounts
  4. Approval of annual accounts and deciding how any profits are used, including the setting of the dividend and management bonus
  5. Removal of administrative board members from office (discharge)
  6. Voting on issues for which, according to law or the company’s constitution, it has responsibility

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