The importance of Annual General Meetings (AGM) cannot be overstated. For starters, they are required. Secondly, important topics are discussed there: shareholders approve financial accounts at AGMs. Your company won’t be able to satisfy ACRA’s filing requirements unless the shareholders agree.
The good news is that if you don’t want to, you don’t have to have offline AGMs. All of the documents may be signed remotely by the shareholders. We’ll go over how to make the move to the AGM format later in this article.
What Goes On in These Meetings?
The firm tells its shareholders about its current financial condition during annual general meetings: the executives present financial statements, and the shareholders vote to approve them.
Shareholders also vote on dividend declaration, re-election of directors, and directors’ fees during AGMs.
Do You Need To Hold AGMs?
AGMs are only required for public companies. Private limited corporations can choose whether or not to use them.
If you don’t want to organise AGMs, your company’s members must approve a resolution to do away with them. Simply ask your company’s secretary to put the document together. For the document to take effect, it must be signed by all shareholders.
Even if AGMs are no longer required, you will still need to pass written resolutions on issues that would normally be discussed at AGMs. The primary topic is financial statements. Written resolutions can be distributed on paper or as e-mail attachments.
The resolution prohibiting AGMs may no longer be in effect; members might withdraw the dispensation by passing a new resolution. If this is the case, an AGM becomes a necessary requirement once more.
Your shareholders will still have to pass resolutions if you don’t have AGMs, but they will be able to do it remotely.
Discussing Financial Year End, AGMs, and Annual Returns
Why is the FYE significant in this case? The conclusion of the company’s accounting period is known as the financial year end (FYE). It happens once every 12 months. The FYE establishes the filing deadlines for AGMs. Even if you don’t hold Annual General Meetings, you must prepare the papers for these Annual Returns. Don’t worry; it’s the corporate secretary’s responsibility, not yours.
How about your Financial Statements? Every business that is exempt from holding annual general meetings (AGMs) must deliver its financial statements to its shareholders within 5 months after the end of the fiscal year. Then, depending on your business type, you send the FS to ACRA with or without the Annual Return.
You are excused from reporting your financial statements to ACRA if you have less than 20 shareholders and none of them is a company. Firms that are partially owned by other businesses, on the other hand, are required to produce financial accounts. Insolvent businesses are also required to do so.
Annual Returns is a compilation of records that show the financial health and condition of your business. Only when the shareholders have signed the resolution approving the financial statements is the AR to be submitted. Your AR should be submitted within 7 months of the FYE, according to ACRA.
So, here’s how a Solvent Exempt Private Limited Company should proceed:
- Your company issues a resolution to dispense with AGMs.
- All the members adopt it and you forget about the meetings.
- After each FYE your corporate secretary e-mails a resolution on the financial statements to all the shareholders, they sign.
- Your secretary files the ARs with ACRA.
How to call an AGM
Notice. The forthcoming meeting must be announced to all board members, shareholders, and executives of the firm. The corporate secretary is in charge of drafting and sending the notifications. These documents must provide the meeting’s date, location, and time, as well as topics for discussion, special resolutions on the agenda, and voting thresholds for adoption.
What is the best way to send notices? In the company’s constitution, the manner of supply must be mentioned. You can select email as your preferred form of communication.
AGMs allow shareholders to engage in the day-to-day operations of their businesses. During these meetings, important resolutions for corporate accountability are approved. Private limited corporations can opt out of traditional offline AGMs, but resolutions must still be passed. It is possible to do so by e-mail. Nonetheless, a corporation must convene an AGM in response to particular demands from shareholders and auditors. AGMs must be held no later than 6 months following the FYE, with ARs due within a month of the meeting.
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