One of the fundamental compliance requirements when you have a company in Singapore is to hold your AGM, or Annual General Meeting. This allows all of the company’s shareholders the right to take part in the decision-making process of the company.
What is the purpose of an AGM?
A company holds an AGM mainly to:
Present the company’s financial statements
Seek approval of other business transactions of the company
What is the purpose of an AGM?
Presenting the company’s financial statements
The company has to present its financial statements to all shareholders during the AGM. The financial statements should provide a “true and fair” assessment of the company’s financial performance during the year. After the financial statements are presented, the shareholders have to adopt and approve the financial statements.
Privately held companies have 6 months from the end of the fiscal year end to present its financial statements at its AGM.
Approval of other business transactions of the company
The company also approves other business transactions of the company during an AGM. These are a few of the business matters that require shareholders’ approval at the AGM:
- Dividend declaration
- Retirement and appointment of directors
- Appointment of auditors
- Authorization to issue shares
What types of Singapore companies have to conduct AGMs?
If you operate a private company, AGMs are not necessary and, if all board members agree, they can pass a resolution to dispense with the holding of the AGM. If the board agrees, then all matters that require approval at the AGM will need to be done by passing a written resolution.
When should a company hold its AGM?
A company has to hold its first AGM within 18 months from the incorporation date.
From then onwards, the company has to hold the AGM every year, with the period between two AGMs not exceeding 15 months.
What do I need to be aware of?
Notice of meetings
The company issues a notice of meetings to all the board members, shareholders, and officers of the company. The notice has to contain the date, place and time of the meeting, business items that the company has to discuss, any special resolutions on the agenda (and the voting thresholds required for approval), and any rights the recipient has to appoint a proxy.
This notice needs to be sent a minimum of 14 days before the AGM (in the case of business requiring the passing of an ordinary resolution), 21 days before an AGM where special resolutions will be used, and 28 days where there is a special notice requirement.
A company can give a shorter notice for its meetings if the members who are entitled to attend and vote at the meeting agree to it. It is a responsibility of a company’s company secretary to draft and send the notices of these meetings. These notices are often done online – however, the constitution of the company needs to specify the mode of delivery if it chooses an online method as the default mode of sending notices.
The quorum of a meeting refers to the minimum number of present members that an AGM requires to be valid. In Singapore, the quorum involves a minimum of 2 members to be present personally unless the constitution of the company states otherwise. The company cannot transact any business at the meeting unless it fulfils the quorum requirement.
If a shareholder is unable to attend the AGM, he can appoint a proxy to attend the AGM and vote on his behalf. The proxy does not need to be a member of the company, and a member can appoint up to 2 proxies to attend the AGM.
The notice of the meeting circulated to the members of the company should clearly state the right of members to appoint a proxy. A proxy form shall be an attachment to the notice of the company.
Sometimes the shareholders may wish to propose a resolution at a meeting, such as
- Removal of directors and
- Removal of auditors from their office before their term of expiry.
When that happens, the shareholders will need to provide a special notice of the resolution to the company 28 days before the date of the AGM. The company will send this notice to all members at least 14 days before the meeting.
The aim of sending a special notice is to invite special attention to a particular resolution that shareholders wish to propose in the upcoming meeting.
Shareholders of a company make decisions by passing resolutions. There are two types of resolutions, ordinary and special resolution. Unless your constitution says otherwise, the passing of the ordinary resolution is usually sufficient.
Ordinary or routine business matters require the passing of an ordinary resolution which is by means of a simple majority of at least 50%. Most of the company decisions need an ordinary resolution. These are some examples of matters that require the passing of an ordinary resolution:
- Dividend declaration
- Appointment and remuneration of auditors
- Electing directors in place of retiring directors
Unique business transactions of the company require the passing of a special resolution using a majority of at least 75% in favor of the resolution. This resolution is for major business decisions or changes to the company.
Due to the significance of the matter, more shareholders need to approve the resolution.
Following are a few examples of matters that require the passing of a special resolution:
- Alteration to clauses in the constitution
- Reduction in the share capital of the company
- Change of company name
Written resolutions are resolutions in which the company does not pass at a shareholders’ meeting, but by circulating the proposed resolution to shareholders for their approval.
Private companies use this method of passing resolutions in writing.
A private company can pass an ordinary or special resolution by written means instead of holding a shareholders’ meeting. The company circulates the resolution to its shareholders for approval. The majority required for the approval on the passing of the resolution is on the same basis as an ordinary and special resolution.
Extensions and Penalties
If a company cannot hold an AGM in time (this is often due to a delay in preparing financial statements), they can ask their company secretary to file for an extension of time with ACRA, up to a maximum of 2 months. If a company does not meet its deadlines to hold their AGM, or the accounts laid at the AGM were not updated, the company and its company directors are subject to financial penalties by ACRA.
Don’t fall foul of your ACRA obligations to hold an AGM – we can help you with the process around your AGM, or help prepare a resolution to dispense with them altogether.
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