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Setting course for an effective AGM – Shareholders



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At this time of year, ASX-listed
companies with a June year end are preparing for AGMs. Here is a
checklist of key actions to lay the foundation for a successful
event.

Have you announced the date?

A listed entity must announce the date of its AGM via ASX at
least 5 business days before the closing date for receipt of
nominations for election of directors. An entity must normally
accept those nominations up to 35 business days before the AGM.

This is a brief announcement which precedes the formal Notice of
Meeting.

Are you communicating with key stakeholders ahead of time?

Allow time to ‘check in’ with key shareholders and proxy
advisers, particularly to sound them out on sensitive issues such
as remuneration, any proposed changes to the capital structure,
issues of shares or options to directors and Board composition.

Plan these conversations so you ensure that anything
“market sensitive” has already been announced.

What is in the agenda?

Consider all possible items of business, to allow time to draft
explanatory notes and consult with ASX if necessary. For
example:

  • If there was a ‘strike’ against your remuneration
    report last year, you need to comment on how you responded to any
    questions on remuneration from last AGM, as well as allow for a
    spill resolution if there is a second strike this year.

  • You may need ratification of share issues not previously
    approved by shareholders (in order to ‘refresh’ your
    placement capacity).

  • You may require shareholder approval to implement proposed
    share or option issues to directors, or implement changes to the
    capital structure (such as a consolidation of shares)

  • You may wish to update the company’s Constitution to
    expressly allow for hybrid and virtual meetings going
    forward1.

How many Board vacancies are there?

The Board cannot set the number of directors below the maximum
board size in the Constitution without member approval. For
example, if the incumbent board is five directors but the
Constitution allows for a maximum of ten directors, the Board will
need an ordinary resolution to support any Board recommendation
that the size of the Board be limited to five directors.

In addition, the Board will needs to give early consideration
to:

  • which directors must retire by rotation under the
    constitution,

  • if such directors will put themselves forward for re-election;
    and

  • changes or additions to the Board to deliver better diversity
    in gender, background and skills.

Do you need to increase your NED remuneration pool?

An increase to the maximum aggregate remuneration of
non-executive directors requires shareholder approval by ordinary
resolution. Assess your current cap on the remuneration of the NED
pool before the AGM, particularly if the Board is growing. The
Remuneration Committee may wish to seek external validation of the
new cap, and it may be a topic of conversation with key
stakeholders, before including it in the AGM’s business.

Are any 3-yearly approvals needed?

Some matters have a three year approval cycle; they must be
approved every third AGM in order to remain effective. The matters
that operate on this three year cycle are:

  • Confirming that issues under an employee share, option or
    performance rights plan are an exception to the 15% placement limit
    in Listing Rule 7.1.

  • Renewal of a proportional takeovers provision in the
    Constitution if there is one.

Check whether the time has come for either of these to be
approved, and if so, include them in this year’s Notice of
Meeting.

Do you need to consult with ASX?

Where the agenda includes particular Listing Rule approvals or
changes to the Constitution, a draft Notice of Meeting must be
submitted to ASX for review before sending to members. ASX has up
to five business days (commencing on the day after lodgement) to
review the documents and confirm any objections, unless it requires
more time to examine the documents.

Is your technology ready?

If you plan to hold a hybrid or virtual meeting sUP>2, ensure
that your chosen technology platform is the right “fit”
for you and that it will facilitate members’ fair participation
through voting and asking questions, as well as helping your team
present the meeting’s content smoothly and professionally. Take
time to reflect on learnings from last year and whether the
technology used was up to the task.

Give yourself plenty of time to test the technology you’ll
use, for example by having team members try out the platforms for
voting and asking questions, in order to check “the user
experience”.

Are you prepared to run polls?

Regardless of whether you’re meeting physically or through
technology, if you’re a listed company you must conduct a poll
for all resolutions on the Notice of Meeting.

Make sure you give your members clear guidance before and during
the meeting about the different ways in which they can vote.

On the day.

A copy of the contents of any prepared announcement that will be
delivered at an AGM, such as the Chair’s and CEO’s address
must be given to ASX no later than the start of the meeting.

Also, remember to report the votes on all items of business to
ASX immediately after the AGM has concluded.

Careful planning and time management are critical to a
successful AGM. By working through this checklist and taking
appropriate action, you will lay the groundwork for a successful
and well-run AGM and minimise the risk of unpleasant surprises.

Footnotes

1 Legislation passed in April 2022 permanently
allows for virtual meetings, but only if the Constitution so
provides. See our earlier update:
https://piperalderman.com.au/insight/temporary-measures-made-permanent-corporations-amendment-meetings-and-documents-bill-2021-passed-by-the-senate/

2 Give yourself plenty of time to clarify what
is permitted by your constitution.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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