If you own shares in a company you’re entitled to attend its annual general meeting (AGM) where you have a chance to grill directors about issues like performance and pay. Despite this opportunity, the number of shareholders attending AGMs has fallen dramatically in recent years.

That’s mainly because most investors today deal through investment platforms and don’t have their names on share registers. Thus they don’t receive annual reports and invitations to AGMs.

Technically the investment platforms own the shares, not you; however the voting rights are still yours.

Nominee accounts

When you invest via an investment platform your shares are held in a ‘nominee’ account, which administers and looks after all of the investments made via the platform.

A drawback of having your shares held in a nominee account is you’re not classed as the legal owner of the shares. The platform is the legal owner and you are only the beneficiary. Your name and contact details aren’t visible to the investee company.

Neither the investee company nor the investment platform will tell shareholders with a nominee account about an AGM, so if you’re interested in attending you’ll need to find out the date yourself.

Companies are required to give shareholders 21 days’ notice and they often publish the date in their annual report. You can also look at the market diary published on Shares’ website at                             www.sharesmagazine.co.uk/market-diary to find the relevant information.

In order to attend you’ll need to ask your investment platform for an attendance card.

For example, AJ Bell Youinvest says if a customer provides it with five days’ notice it will send a ‘letter of representation’ so the shareholder can attend the meeting and vote. If you want to vote by proxy, you can give AJ Bell Youinvest your instruction by secure message. Both options are free, but other investment platforms might charge you.

A typical AGM

The AGM is part of a company’s normal financial calendar and takes place once a year.

The format will vary, but typically involves some initial mingling time; the presentation of the annual report; a shareholder vote; and a question and answer session. If you’re lucky, you might get a sandwich lunch and refreshments.

Annoyingly, some companies hold their AGM at 9am, often in London, making it incredibly difficult and expensive for people living outside the capital to attend. Other companies have taken these complaints on board and hold their meetings later in the day.

Interaction with directors

An AGM offers a rare opportunity for shareholders to interact with executives. Cliff Weight, director at ShareSoc, suggests arriving an hour early so you can have a chat with the directors before the meeting officially starts.

‘The AGM offers you the chance to look the executives in the eye, see if they’re trustworthy and work out if they are speaking with confidence,’ he says.

You can ask the directors questions about very specific matters which aren’t clear in the company’s annual report or website. Weight recommends sending questions to the company a few days before the AGM so they can prepare a detailed answer.

Controversial issues

Sometimes AGMs can be exciting and controversial, particularly if issues arise about executive pay or the environmental impact of the company’s actions.

Annabel Brodie-Smith, communications director at the Association of Investment Companies, says investment trust AGMs often feature a talk by a star fund manager.

These meetings can attract a large number of shareholders because they want to hear what the manager has to say, meet them and ask questions directly.

AGMs can also be good fun. Weight says the ones held by Aviva (AV.), Reckitt Benckiser (RB.) and Young & Co’s Brewery (YNGA:AIM) are particularly worthwhile.

Young’s has been known to give a voucher for a free pint of beer, Finsbury Food (FIF:AIM) hands out cakes and bread, and Aviva has offered discounts to shareholders who take out a policy at the meeting.

Some meetings are tedious

Be aware that not all AGMs are the same. Some are sparsely attended and simply involve the chief executive reading out a very lengthy annual report.

Peter Parry, policy director at the UK Shareholders’ Association, says some meetings can be pretty tedious, especially if the directors get stuck answering a question on a very niche issue.

‘If the chairperson is prepared he or she will know how to answer questions properly, but in some instances they can dance around the issue,’ he adds.

EGMs

A company might decide to hold an extraordinary general meeting (EGM) if there are issues to be discussed and approved that can’t wait until the AGM.

EGMs can be about substantial changes or major threats to the company. Sometimes they involve issues that threaten shareholder value.

Because the resolutions can result in a significant change to an individual’s shareholdings, AJ Bell Youinvest says it alerts customers about EGMs and allows them to vote online. (EP)

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