The annual general meeting is a legal obligation and shareholders must be notified in advance. There is, however, no legal insistence that the meeting is held in a convenient spot, so if the directors are feeling bloody-minded they could hold it in the upstairs room of a pub on Stornoway. Curious times and inconvenient places for meetings, plus company announcements on Christmas Eve, are good signs to shareholders that all is not well with the business.
At the meeting they are called on to approve the accounts by voting, can ask questions and have a vote on a number of other resolutions including the reappointment of auditors and directors. Most shareholders neglect this privilege, either throwing away the voting card altogether or just sending back the enclosed proxy form giving the chairman carte blanche to vote on their behalf.
Extraordinary general meeting
Shareholders representing at least 10 per cent of the equity may demand the convening of an extraordinary general meeting.
There is a legal obligation to consult shareholders on matters that affect the company’s future. They have the right to vote on major decisions, including actions that may dilute their holdings such as rights issues and employee share options schemes. If they can muster 5 per cent of the company’s equity or 100 shareholders to back them, they can even introduce their own resolutions at the meeting.