Every shareholder of a company will be invited to the annual general meeting (AGM) of the company every year, regardless of whether one is a minority shareholder holding only one share or a major shareholder. Unfortunately, most minority shareholders choose to ignore this invitation, probably because we think there is nothing much we can influence or change with only one vote in hand.
In reality, companies value every shareholder and welcome all to attend their AGM. Some companies even go to the extent of holding the AGM at a luxury hotel, providing good lunches and presenting attractive door gifts to increase investor attendance. In fact, all investors should take the AGM seriously as there are a lot of other intangible benefits we can acquire from an AGM.
What is an AGM?
An AGM is an annual meeting required to be held by companies under the law, mainly to review the company’s financial performance and future prospects with shareholders as well as to elect the board of directors. It is also a platform for shareholders to ask about the company’s wellbeing. In general, the agenda for an AGM consists of the following:
From the indicative list above, we can see that it is an open and a rare opportunity for shareholders to meet the top management of a company we have invested in. This is the time when we get to go through the company’s financial performance and future prospects of the company with the people driving the company. As its part-owner, shareholders are entitled to know the company’s potentials to make sure our investment is sound.
However, investors must also be careful of the positive impressions given by the management during the AGM. Sometimes, these are just too good to be true. Therefore, we should use our own judgement and observation to determine whether the future projections or new projects proposed are realistic in generating profit, or are merely attempts to woo shareholders to invest in shaky business deals.
Some shareholders do not even know who the board of directors are when buying shares of a company. When we attend a company’s AGM, we get to see the directors in person, understand their background and analyse whether these people have relevant expertise in the business of the company. We also get to know how much the company is paying them, and whether shareholders’ money is well spent on people who can actually drive the company to further success and growth.
The declaration of dividend is one item on the agenda all shareholders are interested in, as this is the money going back into every shareholder’s pocket. We will get to know first-hand the dividend declared for the year and to check whether it is in line with the company’s dividend policy.