04.09 2014

AGM Session is fast approaching

It is at this time of the year that listed companies begin thinking about their Annual General Meeting (AGM). With shareholder class action and other disruptive activity on the rise, it is increasingly important to have open dialogue with shareholders. The relevant AGM materials, including the Notice of Meeting and Explanatory Memorandum (AGM Materials) are a way for companies to communicate their objectives for the year ahead. Rather than view AGM season as a burden, companies should focus on the opportunity this presents to engage in a positive way with its financial backers and owners.

The following update briefly summarises key timeframes to be aware of during the lead up to AGM season and highlights several important shareholder resolutions that a listed entity may need to consider.

Timing

Listed entities are required to hold their AGMs within 5 months of the end of their financial year. For most companies, the end of their financial year is 30 June, which means that the AGM Materials need to be prepared, printed and sent to shareholders with sufficient time to hold the AGM by no later than 30 November.

While that may seem like quite far away, you should bear in mind the following possible timing constraints:-

  • The AGM Materials need to be sent to the ASX and the ASX must be given at least 5 clear business days to complete its review, commencing on the day after lodgement;
  • If the AGM Materials include resolutions that require ASIC approval, such as ‘related party’ transactions, then they will need to be submitted to ASIC. The company should allow at least 14 clear calendar days (commencing on the day after lodgement) for ASIC to complete its review before dispatching these documents to shareholders;
  • Depending upon the volume of AGM Materials, printing and despatching these documents to shareholders can take between 3 and 5 days; and
  • Shareholders of an ASX listed company must be given a minimum of 28 days’ notice of an upcoming AGM (possibly longer depending upon the provisions in the constitution).In preparation for your company’s AGM it is important to begin contemplating what resolutions are require to be passed. The following is a list of common resolutions to consider:-

Resolutions

  • Re-election of directors – most company constitutions provide for the rotational retirement and re-election of directors at each AGM;
  • Two strikes resolution – a specific resolution must be included in the AGM Material if, at last year’s AGM, more than 25% of the eligible votes cast were against the remuneration report presented by the company;
  • Ratification of allotments not previously approved by shareholders – AGMs are an appropriate time for a company’s shareholders to ratify any securities allotted during the previous 12 months that were not already approved by the shareholders to ensure the company’s existing placement capacity (under ASX Listing Rule 7.1) is not eroded.
  • ASX Listing Rule 7.1A approval – certain small and mid-cap companies may be entitled to seek shareholder approval to issue up to a further 10% of their issued capital in any 12 month period (in addition to their usual capacity of 15% under ASX Listing Rule 7.1). To seek such approval, specific information needs to be included in the AGM Materials.
  • Approval or renewal of employee share and option plan or performance rights plan – these plans must be refreshed every three years to rely on exception 9 in ASX Listing Rule 7.2.
  • Proportional takeovers resolution – if a company has constitutional provisions relating to proportional takeovers, those clauses are required to be renewed every three years and must be approved by a 75% majority.

Should you or your company require any assistance in the lead up to its AGM, in terms of strategic planning and drafting of Corporations Act 2001 and ASX Listing Rules compliant AGM Materials, please contact us.


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