We have amended the document to reflect the revised NAPF corporate governance policy and voting guidelines published on 18 November 2013.
A toolkit for annual general meetings
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.
Preparing for an AGM
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.
Form of notice and proxy form
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.
Business to be conducted at an AGM
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)).
Approval of the directors' remuneration policy (at least every three years).
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 Practical Law form of resolution, links to resolutions proposed by FTSE 350 commercial companies during 2013 (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.
Forms of resolutions proposed at AGMs
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 2013: 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/1-549-3746) (various recommendations against approval of reports and accounts)
Approval of the directors' remuneration report
Quoted company: Section 439
NAPF: Corporate governance policy and guidelines on voting 2013: paragraphs D.1.10, D.1.11, D.2.3 and D.2.9 (www.practicallaw.com/1-549-3746) and GC100 and Investor Group: Directors' remuneration reporting guidance 2013 (www.practicallaw.com/6-540-9731)
Approval of directors' remuneration policy
Quoted company: Section 439A
ABI: Principles of Remuneration (2013): Appendix 1 (www.practicallaw.com/7-548-2085) and NAPF and Hermes: Remuneration principles for building and reinforcing long-term business success 2013 (www.practicallaw.com/3-549-3745) and NAPF: Corporate governance policy and guidelines on voting 2013: paragraphs D.1.9, D.1.10 and D.1.11 (www.practicallaw.com/1-549-3746) and GC100 and Investor Group: Directors' remuneration reporting guidance 2013 (www.practicallaw.com/6-540-9731)
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 2013 (www.practicallaw.com/1-549-3746) (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 2013: paragraph C.3.2 (www.practicallaw.com/1-549-3746))
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 2013: paragraph E.2.2 (www.practicallaw.com/1-549-3746))
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)
Annual reports and accounts
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, including those of an AIM company (www.practicallaw.com/0-502-1945)(unless that company falls within the definition of quoted company for the purposes of section 385(2) CA 2006), 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.
Directors' report and strategic report
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. From 1 October 2013, all companies (apart from small companies) must prepare a stand-alone strategic 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.
Directors' remuneration report
The directors of a quoted company have a duty to prepare a directors' remuneration report for each financial year. From 1 October 2013, the directors' remuneration report comprises two distinct parts:
Annual report on remuneration. A report on the directors' remuneration in the relevant financial year (the year which is being reported on), setting out actual payments to directors and presenting data on the chief executive’s pay relative to measures of company performance over the last five to ten years. This report must also state how the company intends to implement the remuneration policy in the current financial year. This report is required annually and is subject to an advisory vote.
Directors' remuneration policy. A future remuneration policy, which is required when a shareholder binding vote is proposed, at least every three years. Once the policy is approved, the company is only able to make payments within the limits it allows. The directors' remuneration policy may be omitted from the directors' remuneration report for a financial year if the company does not intend to put it forward for approval.
For details of the requirements for quoted companies to prepare a directors' remuneration report for financial years ending on or after 30 September 2013, see Practice note, Directors' remuneration report: 1 October 2013 (www.practicallaw.com/8-525-8509). For guidance on the contents of the directors' remuneration report, see GC100 and Investor Group's directors' remuneration reporting guidance (www.practicallaw.com/6-540-9731).
Voluntary environmental reporting
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.
Annotated UK Corporate Governance Code
Practical Law'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 Practical Law know-how:
Chairman's AGM script
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.
Conduct at an AGM
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.
Post AGM formalities
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.
AGM market practice
Practical Law What's Market: FTSE 350 and AIM 50 AGMs
Practical Law 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. .
Dates of FTSE 100 companies' AGMs
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.
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 Practical Law 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.
Annual report and accounts: best reporting
For a list of those FTSE 350 premium equity commercial trading companies that have demonstrated excellence in annual reporting and have been awarded governance awards during 2012 and 2013 or have been identified by the Practical Law editorial team for showing a high standard of annual reporting in certain areas, see:
The following checklists published by Practical Law aim to assist company secretaries and those advising on AGMs.
Preparing for an AGM
Conduct at an AGM
Post AGM formalities
Practical law resources for company secretaries
Practical Law has published a company secretary page which brings together Practical Law materials relevant to company secretaries.