Preparing for an AGM

MSP Org
No Comments
in MSP Secretaries

We’re heading into the AGM season for PLCs. PLCs whose year ends on 31st December need to hold their AGM by 30th June. Here, in the first of two articles, we give an overview of the considerations required to ensure a PLC is compliant. In part one, we look at requirements and giving notice for your annual general meeting, and then in part two we will address preparation and how to run an AGM.

What is the requirement to hold an AGM?

The requirement to hold an AGM arises from Companies Act 2006 (the ‘Act’) section 336(1): all PLCs “must hold a general meeting as its annual general meeting is each period of 6 months”. There is a similar requirement for private limited companies that are traded – they must hold their AGM within 9 months of their financial year-end (s. 336(1A)).

It is important to make sure that the AGM is explicitly identified in the notice of meeting as the “Annual General Meeting” (s. 337(1)). A shareholder meeting (i.e. a general meeting) that is not explicitly identified as the Annual General Meeting and held in the 6-month period following the PLC’s financial year-end will not satisfy the requirements of the Act to hold an AGM and an offence will then have been committed “by every officer of the company who is in default” (s. 336(3)).

The shareholders’ accounts meeting

Whilst the AGM and a PLC’s ‘accounts meeting’ are often the same meeting, they are separate responsibilities of a PLC – both are shareholder meetings.

The accounts meeting is the obligation of a PLC to “lay before the company in general meeting copies of its annual accounts and reports” (s. 437(1)) – this general meeting requirement “must be complied with not later than the end of the period for filing the accounts and reports in question” (s. 437(2)).

With the filing of a PLC’s annual accounts and reports each being 6 months (s. 442(2)(b)) after its financial year-end, and in the same period, the PLC is required to hold its AGM (s. 336(1)), then an AGM that receives the company’s annual accounts and reports makes perfect sense.

Within 6 months following a PLC’s financial year-end, one meeting and one filing (viz. the company’s annual accounts and reports filed at Companies House), will satisfy all three of a PLC’s annual obligations:

Hold an AGM
Hold its accounts meeting
File its annual reports).

Note: the shorter period for public disclosure required by DTR 4.1.3R for quoted companies: the company “must make its annual financial report public at the latest four months after the end of each financial year”.

Problems arise when a PLC’s audited accounts and financial statements are not available either by 6 months following the financial year-end, or they are going to be produced so late that proper notice of AGM cannot be given within the 6-month period. In these instances, MSP Company Secretarial can guide you.

Giving proper Notice of the Annual General Meeting

Proper notice of an AGM for a PLC is given when:

The meeting is explicitly identified as the company’s Annual General Meeting.
The notice of meeting clearly states the time, the date, and the location of the meeting.
The notice states “the general nature of the business to be dealt with at the meeting” (s. 311(2)) – where the company is not traded (i.e. when its shares are not traded on a UK or EU regulated market),* then this requirement is subject to the requirements of the company’s articles.
For a traded company* – one whose shares are traded on a UK or EU regulated market – s. 311(3) of the Act requires:
- The address of the company’s website that satisfies s. 311A (Traded companies: publication of information in advance of general meeting).
- A statement regarding the right to vote at the meeting (s. 311(3)(b)(i)) and the time this voting right will be determined (s. 311(3)(b)(ii)).
- A statement of the procedures for a shareholder to attend and vote at the meeting (s. 311(3)(c)).
- A statement regarding form to be used for the appointment of a proxy (s. 311(3)(d)).
- Details of facilities for shareholders to vote in advance or by electronic voting (s. 311(3)(e)).
- A statement of the right of shareholders to ask questions in accordance with s. 319A – Traded companies: questions at meeting (s. 311(3)(f))
At least 21 clear days’ period of notice of the AGM is given for a PLC (s. 307(2)(a) and s. 360(1)).

Listed companies issue an RNS announcing when the notice of AGM and the company’s annual report have been issued.

Finally, be aware that if a resolution is proposed that requires special notice, then section 312 of the Act applies, and 28 clear days’ notice of the resolution is required.

Traded PLCs giving more than 6 weeks’ notice for an annual general meeting

Traded* PLCs – those whose shares are traded on a UK or EU regulated market – that give more than 6 weeks’ notice of its AGM need to take notice of section 337(3) of the Act which requires the company to include additional details in the notice of meeting.

[* Companies Act 2006 s. 360C defines a “traded company” as one whose shares (i) carry rights to vote at general meetings, and (ii) are admitted to trading on a UK or an EU regulated market by or with the consent of the company.]

People entitled to receive the notice of the AGM meeting

Section 310 of the Act identifies the people to whom the notice of meeting needs to be sent – they are:

All shareholders
Each director

How to Calculate 21 clear days for an AGM

Legal requirements for holding an Annual General Meeting requires at least 21 clear days’ notice to be given. Note that a company’s articles may require a longer period.

The clear day rule is given in section 360 of the Act and requires there to be a minimum of 21 days sandwiched by the day the shareholder can be expected to receive the notice of meeting and the day of the AGM. A resolution proposed at an AGM cannot be validly passed (s. 301) if, among other things, the 21 clear day rule is not met.

Companies still rely on posting the notice of AGM to shareholders, and one thing to be aware of is that from the date of posting of the notice of AGM to the date of the meeting the period is a minimum of 24 (calendar) days, and that assumes that the day of posting and the day of deemed receipt do not fall on a weekend or a public holiday. At MSP Company Secretarial we understand the pressures of companies when preparing for their AGM and we can help you to confirm your AGM schedule to ensure your notice of AGM is issued at the right time.

Working back from the day of the AGM, ‘M day’, an AGM schedule where the notice is sent by post on ‘S day’ looks like this (but note that N day and S day cannot fall on a non-working day and so the schedule will need to be extended accordingly):

		Day
Day of meeting =	M day	M
Last day of AGM notice period (21^st clear day) =		M – 1
First day of AGM notice period (1^st clear day) =		M – 21
Day on which notice is given =	N day	M – 22
Period of deemed delivery starts/Day of sending =	S day	M – 24

Business of an AGM

The following business is often conducted at an AGM:

The company’s annual accounts and report are laid before shareholders.
Directors’ appointment, election of directors or re-election by shareholders.
Directors’ remuneration and remuneration policy approval.
Declaration of a final dividend.
Appointment or re-appointment of the company’s auditor.
General authority of directors to allot shares.
Authority to allot shares non-pre-emptively, if required.
Any specific requirements of the company’s articles.

Care needs to be taken when preparing the notice of AGM to ensure that each resolution being proposed is properly identified as an ordinary resolution or as a special resolution. The category of resolution is determined by a company’s articles and by the Act.

Ordinary vs special shareholder resolutions in an AGM

Ordinary resolutions require a majority vote (i.e. over 50%) in favour of the resolution to be passed. Special resolutions require no less than 75% of shareholder votes to be in favour of the resolution in order for the resolution to be passed.

Note that a special resolution proposed must be identified as a “special resolution”. Where a resolution is required by the company’s articles or by the Act to be passed as a special resolution by shareholders and the resolution is not explicitly proposed as a special resolution in the notice of meeting, the resolution is defective and will be ineffective even if voting in favour of the resolution at the shareholder meeting exceeds 75%.

How MSP Company Secretarial can help

We recognise the need to prepare for an AGM correctly. We can help companies by:

Advising on a company’s obligations – statutory, regulatory, and governance code rules.
Calculating the correct notice period, date and time for the AGM
Drafting the notice of AGM.
Liaising with your company’s share registrar to produce the forms of proxy and forms of direction.
Drafting RNS announcements.
Attending AGMs, prepare a script for the Chair, and prepare minutes.

Need expert guidance for your next AGM? Contact us to see how we can help.

Frequently Asked Questions

Can a PLC’s AGM be called on fewer than 21 clear days’ notice?

Only a non-traded PLC can call its AGM on a shorter notice than 21 clear days’ and only “if all the members entitled to attend and vote at the meeting agree to a shorter notice” (section 337 of the Act).

A non-traded PLC is one whose shares are not traded on a UK or an EU regulated market (by or with the consent of the PLC – section 360C of the Act). UK regulated markets are listed here.

What happens to the AGM schedule when a PLC shortens its accounting reference period?

If a company shortens its accounting reference period (via a section 392 notice) it will likely mean that any AGM the company then schedules will fall outside the 6-month period following its new accounting reference date. So long as the company holds an AGM within the period of 3 months of giving the section 392 notice, the company will be treated as having complied with the regulations for holding its AGM (section 336(2) of the Act) within the required period following its (new) end of year.

How do I find out about regulations regarding AGMs?

If you need help understanding your obligations with regards holding an Annual General Meeting, or a General Meeting, then contact us at MSP Company Secretarial.

You will find a company’s obligations regarding its AGM in (i) Part 13 of the Act (Chapter 3 forms the core requirements and Chapters 4 and 5 address additional requirements for PLCs and traded and quoted companies); (ii) its articles which address general meetings of shareholders (e.g. Part 3 of the Model Articles for PLCs); (iii) the guidance found in governance codes regarding resolutions at AGMs (e.g. QCA Principle 9, UK Corporate Governance Code Provision 18); and (iv) listing rules specify how to make notifications to the market and the FCA (e.g. UKLR 6.4.2R).

Can an AGM be a virtual meeting?

The full legal validity of virtual meeting remains unclear, though the FRC and others are working on clarifying the requirements.

Discussions about general meetings have identified three forms: physical meeting, hybrid meeting, and virtual meeting. A physical meeting is held at a location and participants (other than proxy voters who have voted in advance of the meeting and so who are not present at the meeting but whose votes are included in the voting at the meeting) are physically present at the meeting. A hybrid meeting is one where the quorum is formed in a physical location, however shareholders can join via video/conferencing platforms. A virtual meeting is one where attendance and the conduct of the meeting takes place on a video/conferencing platform – there is no physical place of the meeting.

An AGM can be held with a hybrid meeting so long as a company’s articles do not prevent it. Sections 360A to 360B address the requirements of electronic meetings, participation and voting. The essential requirements are (i) shareholders can hear the meeting’s proceeding; (ii) shareholders can engage and speak at the meeting and can be heard by everyone at the meeting (and for the AGM of a traded company, they can ask questions as required by section 319A of the Act); and (iii) shareholders can use a suitable online platform to vote in real time at the meeting.

The requirement for a quorum must be met, and all notice of meeting requirements have been properly undertaken.

Since COVID, virtual meetings have been the subject of much discussion and the situation is not clear, and any company seeking to hold a virtual AGM should seek professional legal advice. Several matters need to be resolved. One matter requiring clarification is whether a virtual meeting satisfies sections 311(1) – does a virtual meeting satisfy the requirement of a “place”?