Annual general meetings
An AGM is a gathering of members held once a year. It’s an important exercise in board accountability to members.
The main purpose of an AGM is to allow members to:
- receive information and reports about the corporation’s performance and financial position
- ask the board and auditor questions
- exercise their rights to make key corporate decisions such as appointing directors.
This includes:
- giving the members reports and financial information
- allowing members to ask questions and express their views on the corporation’s governance and performance
- allowing members to vote on matters like the appointment of directors and auditor, and related party transactions.
When to hold an AGM
Every corporation must hold an AGM every year within 5 months after the end of its financial year (usually 30 June). That means most corporations must hold an AGM between 1 July and 30 November each year.
If you can’t hold your AGM by the end of November, lodge a request for an extension of time – called an exemption. The Registrar will only grant an extension of time for holding an AGM in exceptional circumstances.
You must send your request well before the deadline for holding your AGM passes because if the Registrar does not grant the extension you must hold your AGM by the end of November. If the Registrar does grant the extension you must hold your AGM within the extended period.
Rules for AGMs
An AGM follows all the rules for general meetings. But there are some extra requirements.
Business of an AGM
Business of an AGM usually includes:
- checking that members’ details on the register of members are up to date
- confirming the minutes of the previous general meeting or AGM
- talking about the corporation reports – general, financial and directors’ (if required)
- electing directors (according to your rule book)
- choosing an auditor for the next year and agreeing on the fee
- asking questions about how the corporation is managed.
These items should be discussed even if they’re not in the notice of meeting.
Reporting to members
The board is responsible for the corporation’s performance, so they need to report to members about it. They should report on how the corporation is meeting its purpose or if not, why not. A good report will:
- summarise the year’s activities and achievements (how the corporation performed against its strategic plan)
- include financial performance and position
- preview what’s planned for next year.
If your corporation has a CEO/manager, they should also present a report to members on the corporation’s business and operations.
Mythbuster: Members do not approve reports; they receive them. A corporation does not need to wait for members to approve its annual reports before it can lodge them with ORIC.
Appointing an auditor and auditor reporting
A corporation that is required to prepare a financial report under the CATSI Act must also have the report audited by an independent auditor.
An auditor provides checks and assurance for members about the governance and management of the corporation’s finances. Therefore, deciding who the auditor will be for the year and agreeing to their fee is a decision for members.
Appointing an auditor
Before an AGM the directors and/or management should seek quotes from 2 or 3 auditors for doing the next year’s audit. At the AGM the members vote to appoint an auditor and agree on their remuneration (payment).
Hearing from the auditor
Once an auditor is appointed they are entitled to receive notice of upcoming general meetings or the AGM so they can attend to report to members their opinion on the corporation’s finances. Members are also allowed to ask the auditor questions about:
- how the audit was done
- how the corporation’s financial statements were prepared.
Appointing and removing directors
The AGM is the time that most corporations appoint their directors. Although members may need to make decisions about director positions at any general meeting. The task of appointing directors is so important that the CATSI Act allows for it to be part of the business of an AGM even if it wasn’t set out in the notice of the AGM.
- Before a general meeting or AGM, confirm what directorship decisions need to be made by members:
- Has the board of directors made any director appointments that need to be confirmed by members?
- Are there vacant positions that need to be filled? Count current vacant positions and director terms that will end at the upcoming meeting.
- Have members proposed any resolutions to remove current directors?
Rules about appointing directors are replaceable so check your rule book for:
- eligibility requirements
- the process for appointing people.
Consider what skills and experience the corporation might need to help achieve its purpose and vision. The corporation may have a skills audit and succession plan for its board of directors.
Unless the rule book says otherwise, this is the process for appointing the directors:
- Ask for nominations for positions as directors.
- Check the nominated person is eligible.
- Ask the nominated person if they are eligible and willing to hold the position of director if elected – if the person agrees, they must declare they are eligible and provide their consent in writing and the corporation needs to keep a copy.
- If the number of directors standing for positions is greater than the number of positions to be filled, an election must take place.
Someone who does not have their director ID can still be appointed and carry out their duties as director, but they may receive a penalty.
