Why AGMs matter to investors and how to vote

When you purchase shares, you are buying just that – a share of a company. It’s easy to think of your holdings as just numbers on a screen but, for several reasons, it’s helpful to remind yourself you are a part-owner of said business.

Not least because, as a part-owner you have a say in how the business is run with the ability to vote at annual general meetings (AGMs) and one-off extraordinary general meetings (EGMs).

What is an AGM and how does it work?

The AGM is mandatory part of a company’s normal financial calendar and, as its name suggests, takes place once a year. The format will vary, but typically it involves the presentation of the annual report, a shareholder vote on a number of resolutions, and a question-and-answer session.

Typical resolutions include:

• To receive the report and accounts
• To declare a dividend
• Election/re-election of directors
• Authority to allot shares
• To approve the remuneration policy and report

It is rare for resolutions to be voted down – to pass they need to get a simple majority of all the votes cast. However, if significant opposition is registered in certain areas then companies will often take account of this in future decision making.

Special resolutions, for example moving a company’s headquarters, changing the company name or approving the sale of a company, require a 75% majority.

When is an EGM held?

An extraordinary general meeting or EGM refers to a shareholder meeting called outside of an AGM to deal with important matters that cannot wait until the next annual event. They often relate to the special resolutions mentioned above.

Typically, they encompass items like mergers and acquisition activity or changes to a company’s structure or stock market listing. Major shareholders can also demand them, often if they want to remove incumbent directors and/or appoint other directors to the board.

Even if you don’t own individual stocks, it’s worth noting that investment trusts also hold AGMs and EGMs.

Voting at and attending AGMs and EGMs

If you are able to attend an AGM or EGM in person, it does give you the opportunity to quiz company directors face-to-face. If, like most people, you hold shares in the nominee account of an investment platform, then you are not on the share register (the platform is instead).

That means if you do want to attend in person, you will need a letter of representation, which you can request from your platform. It’s worth remembering that you may need to allow some time for such a request to be processed.

Attending meetings will not be practical for many people, particularly if you don’t live in London, where the majority are held. However, you do not need to attend an AGM to vote – you can do so electronically for free.

On the AJ Bell platform it has just been made easier to vote online at AGMs and EGMs for both UK and international shares, as well as investment trusts. You will get a notification when you are able to vote in a meeting for a stock held in your portfolio and when logged into your account, voting instructions can be placed quickly and easily. Find out more here.