With AGM season fast approaching for most public companies, it is important that AGM preparations are commenced now.
While the holding of an AGM is a relatively routine procedure, there are still a large number of technical issues which must be dealt with. This leaves significant scope for inexperienced companies or those holding their first AGM to make mistakes.
Some of the more common mistakes include:
- newly incorporated public companies not holding their first AGM within the time required under the Corporations Act;
- not correctly identifying what resolutions need to be put to shareholders at the AGM, including those required by the Corporations Act, the Listing Rules (if applicable), the company’s constitution and any commercial transactions;
- not drafting the notice of meeting (NOM) in accordance with the relevant statutory requirements;
- not recognising that including certain resolutions, such as those involving the issue of securities to a related party or the giving of a financial benefit, result in the need to lodge the NOM, any ancillary documentation and ASIC forms (if applicable) in advance with ASIC and ASX (for listed companies); and
- otherwise not complying with the time requirements for lodgement of the various documents with ASIC.
- AGMs provide a rare platform for shareholders to engage in active dialogue with directors. Given the events of the past 12 months and consequential negative impact to share values, dividends and company performance, shareholders will no doubt want to use this year’s AGMs to question the actions of their board and future strategies. Directors need to be prepared to answer ‘hard’ questions which may be put to the board by disappointed shareholders.
Often the answers to these questions can be difficult to explain given complex strategies or commercial arrangements which have been implemented at a board level. Some questions may also not be able to be answered due to confidentiality requirements. Directors need to have a strategy in place to deal with these issues.
We encourage anyone who has any doubts about the preparations for their AGM to contact us for advice and assistance.
08/09 Reporting Season: ASX listed companies, have you incorporated the revised ASX corporate governance principles?
There is little doubt that the current reporting season presents numerous challenges for listed companies, given the ongoing volatility and depressed market climate which have seen many companies experience record declines in profit, substantial write downs, cancelled dividends and refinancing and capital raisings.
As companies grapple with how best to report on the affect such challenges have had on their performance, it is timely to remind ASX listed companies (with a 2008/2009 financial year) that this will be the first time that they are required to report under the revised ASX Corporate Governance Principles and Recommendations (Recommendations). The revised Recommendations were released in August 2007 and became effective for each ASX listed company’ s first financial year commencing on or after 1 January 2008.
Some of the changes to the Recommendations are significant and we recommend that all ASX listed companies review their compliance with the revised Recommendations.
We also recommend companies continue to maintain a high level of reporting diligence given that ASIC and the ASX have announced that they will be monitoring company reports, announcements and compliance with the Recommendations in more detail this season.