We have amended the document to reflect publication of the above on 14 February 2013
A toolkit for annual general meetings (AGMs).
This toolkit acts as a guide to PLC Corporate's resources on annual general meetings (AGMs). The PLC materials set out the law and practice in preparing for and running an AGM and the formalities that need to be addressed following the AGM.
Under the Companies Act 2006 (CA 2006), only public companies and private traded companies (www.practicallaw.com/2-386-7257) are required to hold an AGM.
Although this guide relates to AGMs, the resources are relevant for all general meetings.
Practice note, General meetings (including AGMs): preparation and notice (www.practicallaw.com/1-376-4250), which covers issues to be considered when preparing for and calling an AGM, including who can call a meeting, length of notice required and who is entitled to receive notice.
Standard document, Notification of documents or information available on a website: Companies Act 2006 (www.practicallaw.com/9-211-6952). This letter can be used to notify shareholders that the notice of AGM and relevant materials, are available on the company's website.
It is usual for some or all of the following resolutions to be proposed by companies at their AGM:
Receiving the annual reports an accounts (Resolution (member): consideration of report and accounts (www.practicallaw.com/2-107-4169)).
Approval of the directors' remuneration report (Resolution (member): directors' remuneration report (www.practicallaw.com/0-102-3029)).
Declaring a final dividend (Resolution (member): declaration of a final dividend (www.practicallaw.com/0-107-4170)).
Re-election of directors (Resolution (member): appointment of directors (www.practicallaw.com/8-107-4171)).
Re-appointment of auditors and fixing their remuneration (Resolution (member): auditors (www.practicallaw.com/6-107-4172)).
Directors' authority to allot shares (Resolution (member): authority to allot: public listed companies (www.practicallaw.com/2-422-3996) and Resolutions (member): authority to allot and disapplication of pre-emption rights: private and unlisted public companies (www.practicallaw.com/7-386-1371)).
The disapplication of pre-emption rights (Resolution (member): disapplication of pre-emption rights: public listed companies (www.practicallaw.com/0-422-3997) and Resolutions (member): authority to allot and disapplication of pre-emption rights: private and unlisted public companies (www.practicallaw.com/7-386-1371)).
Directors' authority to make political donations or incur political expense (Resolution (member): political donations (www.practicallaw.com/4-376-0260)).
General meetings to be held on 14 days' notice (Resolution (member): general meetings, other than AGMs, to be held on not less than 14 clear days' notice (www.practicallaw.com/0-502-3727)).
Directors' authority for market purchase of own shares (Resolution (member): authorisation for market purchases of own shares (www.practicallaw.com/8-102-3025)).
Amending or adopting articles of association (Resolution (member): altering a company's articles of association (www.practicallaw.com/0-201-1389)).
Amending or adopting an employee share scheme.
Capitalisation or bonus issue.
Approval of scrip dividend alternative/dividend re-investment plan.
In relation to the resolutions identified above, the table, Forms of resolutions proposed at AGMs, includes, in addition to the PLC form of resolution, links to resolutions proposed by FTSE 350 commercial companies during 2011 (see links to What's Market) and identifies the authority for the resolution, the relevant Listing Rule and/or UK Corporate Governance Code provision and institutional investor guidance relating to each resolution.
Authority: CA 2006 or articles of association
Listing Rules/UK Corporate Governance Code
Institutional investor guidance
Form of resolution
Receiving the annual reports and accounts
Public company: Section 437
NAPF: Corporate governance policy and guidelines on voting 2012: paragraphs A.1.4, B.3.2, B.4.2, B.5.2, B.6.3, C.1.2, C.2.2 and F.7.1 (www.practicallaw.com/7-522-8495) (various recommendations against approval of reports and accounts)
Approval of the directors' remuneration report
Quoted company: Section 439
Declaration of a final dividend
Check power in articles of association
Part 23 (Distributions)
The re-appointment of directors appointed since last AGM
The re-election of directors retiring in accordance with the articles and the UK Corporate Governance Code
Provisions in articles of association
Public company: section 160 (directors to be voted individually)
NAPF: Corporate governance policy and guidelines on voting 2012 (www.practicallaw.com/7-522-8495) (various recommendations against re-election for non-compliance with the UK Corporate Governance Code and best practice)
The re-appointment of auditors and fixing their remuneration
NAPF recommends that these resolutions are proposed separately (NAPF: Corporate governance policy and guidelines on voting 2012: paragraph C.3.2 (www.practicallaw.com/7-522-8495))
Public company: section 489 - 492
PIRC: UK shareholder voting guidelines 2013: Voting on the election of auditors (pages 19 and 21)
Directors' authority to allot shares
PIRC: UK shareholder voting guidelines 2013: Share issue authorities (pages 26 - 27)
Directors' authority to make political donations or incur political expense
PIRC: UK shareholder voting guidelines 2013: Political donations (page 29)
Amending or adopting an employee share scheme
Approval: LR 13.8.11 - 13R
Amending: LR 13.8.14
The disapplication of pre-emption rights
General meetings to be held on 14 days' notice
NAPF recommends that the shorter notice should only be used where the flexibility is merited by the business of the meeting. (NAPF: Corporate governance policy and guidelines on voting 2012: paragraph E.2.2 (www.practicallaw.com/7-522-8495))
Traded company: section 307A
PIRC: UK shareholder voting guidelines 2013: General meetings (page 25)
Directors' authority for market purchase of own shares
Section 701 (Although the CA 2006 only requires an ordinary resolution most listed companies propose a special resolution as recommended by the ABI.)
LR 12.4.1R and LR 13.7R
PIRC: UK shareholder voting guidelines 2013: Purchase of company's own shares (page 27)
Amending or adopting articles of association
PIRC: UK shareholder voting guidelines 2013: Articles of association (page 28)
Check power in articles of association.
Generally subject to the approval of shareholders by ordinary resolution.
Part 23 (Distributions)
There is a statutory obligation for public companies to lay their annual reports and accounts before the company in a general meeting. Usually this will be done at the AGM. There is no similar obligation for private companies.
A quoted company’s (www.practicallaw.com/9-381-0489) annual reports and accounts consist of: annual accounts (individual and consolidated accounts); a directors’ report; a directors’ remuneration report; an auditor’s report on the accounts and on the auditable part of the directors’ remuneration report and the directors’ report; and a corporate governance statement.
Generally, an unquoted company’s annual reports and accounts consist of: annual accounts; a directors' report; and an auditor’s report (unless the company is exempt from audit).
Practice note, Company accounts and reports: overview (www.practicallaw.com/5-379-0742). This note provides and overview of the statutory provisions on the preparation, approval, laying and filing of company accounts and reports.
For a summary of the statutory and regulatory content requirements for the annual reports and accounts, see:
Practice note, Going concern statement (www.practicallaw.com/1-107-3882). This note provides an overview of how to assess going concern and the content requirements of the going concern statement.
The directors of a company must prepare individual accounts for each financial year, which comprise the balance sheet, the profit and loss account and notes to the accounts. Parent companies (unless subject to the small companies regime) must prepare full group accounts, which comprise a consolidated balance sheet, consolidated profit and loss account and notes to the accounts. The directors must not approve the accounts unless they give a true and fair view of the financial position of the company or group.
Practice note, Balance sheet, profit and loss account and notes to the accounts (www.practicallaw.com/3-379-0743), which provides an outline of the requirements for a company's individual accounts.
Practice note, Group accounts (www.practicallaw.com/0-378-9411), which provides an outline of the requirements for group accounts.
A company's auditor is required to report to the shareholders on the annual accounts of the company.
The directors of a company must prepare a directors' report for each financial year. Parent companies, which prepare group accounts, must also produce a consolidated group directors' report. All companies (apart from small companies) must include a business review within their directors' report.
Practice note, Environmental reporting for companies: mandatory (www.practicallaw.com/5-501-2161), which sets out what certain companies must do to comply with the statutory environmental reporting requirements in the business review.
Practice note, Company accounts and reports: directors' responsibilities statement (www.practicallaw.com/0-107-4561), as required by the Disclosure and Transparency Rules, the UK Corporate Governance Code and auditing standards.
The directors of a quoted company have a duty to prepare a directors' remuneration report for each financial year. A quoted company must, prior to its accounts meeting, give its members notice of an ordinary resolution, approving the directors' remuneration report, although entitlement of a person to remuneration is not made conditional on the resolution being passed.
On 20 June 2012, the Business Secretary made a statement to the House of Commons announcing the government's proposals for a binding vote on future remuneration policy and an advisory vote on the implementation of the remuneration policy. For further details of the proposed reform, see Practice note, Directors' remuneration report: Reform (www.practicallaw.com/7-520-4159).
Practice note, Environmental reporting for companies: voluntary (www.practicallaw.com/1-501-2747). Some companies chose on a voluntary basis to report on how its operations impact on, or are impacted by, the environment. Voluntary environmental reports are usually published annually with the annual reports and accounts.
Since August 2010, the Department for Business and Skills (BIS) has launched two consultations on the future of narrative reporting. In the second consultation, launched in September 2011, BIS describes a new, simpler reporting framework for UK companies and proposes that the directors' report and the business review be replaced with a strategic report and an annual directors' statement.
On 18 October 2012, BIS published the draft Companies Act 206 (Strategic Report and Directors' Report) Regulations 2013 for consultation. The draft regulations set out changes to the Companies Act 2006, the principals ones being the abolition of the business review and a new requirement for companies to produce a standalone strategic report. For further details, see Legal update, Narrative reporting: BIS publishes a consultation on draft regulations (October 2012) (www.practicallaw.com/0-521-9499).
PLC's annotated version of the UK Corporate Governance Code sets out full text of the Code. Contains links to, and summaries of, relevant ABI, FRC, NAPF, PIRC, GC100 and ICSA guidance, the Disclosure and Transparency Rules, the Listing Rules and PLC know-how:
The scripts are for use at an AGM of a listed company. They include opening and closing statements, a summary of the typical resolutions proposed at an AGM and an explanation of procedural issues.
The resources set out below cover the legal and practical issues which may arise at AGMs. Some aspects of running the AGM are governed by statute and regulation, while others will be set out in the company's articles of association.
Following an AGM, the company secretary must ensure that all minutes and resolutions of the meeting are prepared, signed by the chairman and filed (together with all relevant documents) and that certain information is posted on the company's website.
Checklist, Post general meetings formalities (www.practicallaw.com/0-500-6935), which includes a summary of records to be kept, documents to be filed, announcements to be made and information to be posted on a website.
PLC maintains a database called What's Market which includes summaries of the AGM notices for FTSE 350 commercial companies and AIM 50 companies. What's Market enables subscribers to search and compare market practice on resolutions proposed by such companies at AGMs and certain disclosures made by them in their annual report and accounts. For a summary of the new areas we will be tracking on What's Market for the 2013 AGM season, see Legal update, AGMs: What's Market to track additional corporate governance and remuneration disclosures (www.practicallaw.com/6-523-9475).
Practice note, Dates of FTSE 100 companies' AGMs (www.practicallaw.com/6-503-2762), sets out the dates of the AGM notice and AGM for companies in the FTSE 100.
Practice note, FTSE 350 companies that have proposed annual re-election of the full board (www.practicallaw.com/6-503-2856), contains links to What's Market AGM summaries, where the full board were put forward for annual re-election.
AGM trends 2011: On 22 and 24 March 2011, PLC broadcast a webinar, AGMs 2011: What's Market practice? David Jackson (Company Secretary, BP plc), Alun Eynon-Evans (Partner, Allen & Overy LLP) and Lucy Ryland (Head of PLC What's Market) discussed in detail key trends and issues for the 2011 AGM season and practical issues to consider when preparing for and conducting an AGM. For further details, click here. Following the webinar, PLC produced a report, AGMs 2011: What’s Market practice? (www.practicallaw.com/3-505-5830)which includes a summary of the key trends and highlights covered in the webinar, as well as links to related PLC materials.
AGM trends 2010: Legal update, 2010 AGMs: What's Market practice so far? (www.practicallaw.com/9-502-5784), contains a link to a presentation given by PLC in June 2010 to the GC100 (the Association of General Counsel and Company Secretaries of the FTSE 100) on key trends from the 2010 reporting season.
The following checklists published by PLC aim to assist company secretaries and those advising on AGMs.
PLC has published a company secretary page which brings together PLC materials relevant to company secretaries.