News | 28/10/2019

Back to Basics: “What? I have to do an AGM?”

For many organisations, this is now AGM season – that is, the time of year when they are formally required by their governing rules to conduct an Annual General Meeting. While we often see media showing the major shareholder meetings for Telstra or BHP, across northern Australia associations under the Associations Act (NT) (Associations Act) and public companies incorporated under both the Corporations Act 2001 (Cth) (Corporations Act) and the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) (CATSI Act) must also now report to their respective memberships.

What is an AGM?

An Annual General Meeting, or AGM, is as the name indicates a meeting held annually where the management of the organisation is required to provide a formal update to the organisation’s membership to ensure transparency and accountability. In addition to updating members about the organisation’s activities, it can also be utilised by the members to have input into the direction for the coming year.

It is also a forum where committee members or directors can step down or be removed, and new ones approved to become a part of the governing body. The members are also entitled to review and select the position of auditor.

In essence, the AGM is the annual opportunity for members to understand what their organisation has been doing, provide feedback to the management group regarding performance, and provide input into the direction for the future.

How do I organise an AGM?

The best place to start is your organisation’s governing rules – the Constitution, the Rule Book.

These rules will identify, most importantly, when the AGM needs to be held. For most organisations, this is within five (5) months of the end of the financial year – that is, during the month of November.

Once the timeframe is identified, then the following steps need to be carried out, as well as any others specifically identified in the organisation’s governing rules and the relevant law – Associations Act, Corporations Act or the CATSI Act:

  • Set a date and time for the AGM
  • Work with the organisation’s accountant and auditor to ensure that relevant financial documentation will be ready and that key personnel will be available
  • Check to see whether committee/board members will be stepping down or whether there are vacancies to be filled
  • Book a venue and arrange catering if this is required
  • Issue a formal notice for the AGM. In this regard, check your rules as there is usually a specific timeframe – such as 21 days – that needs to be adhered to
  • If there are to be changes to the organisation’s governing rules, then these need to be prepared and form part of the notice issued for the AGM
  • As part of the notice, ensure that an agenda is prepared
  • Prepare proxy forms if relevant
  • Check nominations for board positions

How do I conduct an AGM?

In the conduct of an AGM – which is normally the responsibility of the Chairperson – there are some initial steps that need to be ticked off – these include: who is present, is there a quorum, have any timing issues been satisfied, and is there someone willing to take the minutes! (Try to ensure that this last item is dealt with well before the AGM commences).

Once these issues have been attended to, then it is a matter of working through the agenda. Commonly, an agenda will include the following

  • Review of the previous AGMs minutes
    • Chairman’s Report;
    • Directors’ Report;
    • Financial Report for the relevant financial year;
    • Auditors Report for the relevant financial year;
    • Election of Directors (if necessary);
    • Consideration of resignation of Members and applications for Membership by new Board of Directors (if necessary); and
    • Appointment of Auditor / auditor’s remuneration.

Once such matters have been addressed, and any general business items have been dealt with, then the AGM will come to an end.

In many remote areas across northern Australia, it is at times unusual for the committee/directors, their management, accountant and lawyer to all be in the one place at the one time. As a result, advantage is often taken of this by immediately holding a separate committee/directors meeting to address any issues. This often saves a great deal of time and expense for the organisation. Perhaps you could take the opportunity to do the same …

However, the end of an AGM is often simply a time to come together and celebrate the successes of the past financial year, while catching up with family and/or friends. If this is to occur, ensure that your catering is in order!

A successful AGM

If you follow the above steps then you will be well on the way to conducting a successful AGM. There are also many different sources of further information should you need it. Should you wish to explore further, we recommend that you start with the Australian Institute of Company Directors: https://aicd.companydirectors.com.au/

For advice regarding the conduct of your AGM, please contact Bowden McCormack on 08 8941 6355 or email the writer at dominic@bowden-mccormack.com.au

The above summary is based on the law as at 28 October 2019.

It covers the relevant legal matter in a general way and is intended for information purposes only rather than as specific legal advice.

Bowden McCormack does not assume any duty of care in relation to this document and specific advice should be sought and obtained in relation to one’s own circumstances before taking any action on the matter addressed in the summary