| by Tom Bloomfield
In this update we examine AGM planning considerations and the questions that are most frequently asked of LIC boards, management and auditors during AGM season.
A Listed Investment Company (LIC) should consider the following when planning their Annual General Meeting (AGM):
LICs will conventionally have one or more institutional investors with securities held behind a nominee holding. Consequently, if a LIC simply relies upon the list of top registered shareholders to know who the major shareholders are, the company may be missing a vital part of the picture.
To gain certainty and clarity on the beneficial holder of nominee held shares, LICs should consider an in-depth analysis of the share register through an investor advisory firm and/or beneficial holder traces through the share registry provider. Such an analysis can assist with:
The Corporations Act 2001 (Cth) preserves a shareholder’s right to ask questions of its board and auditors at the company’s AGM. The Chair of an AGM must allow a reasonable opportunity for the members to ask questions or make comments about the management of the Company. However, the Chair does retain the discretion to rule questions as not pertaining to the meeting or ‘out of order’.
Shareholders have a specific right to ask questions or make comments regarding the remuneration report, and to query the auditors on the conduct of the audit, the preparation of the accounts, or the accounting policies that have been applied.
Generally, the most common questions that LICs face relate to performance, dividends and investment manager remuneration.
The Chair’s address and Investment Manager’s update have historically provided a platform to address most notable concerns that shareholders may have and are both good opportunities to touch on many of the common questions below. Traditionally the Chair’s address will review the past year’s performance and provide a foundation for the Investment Manager to discuss the company’s strategy over the next 12 months.
A copy of the Chair’s address and Investment Manager’s update should be announced to the ASX in the morning of the AGM, prior to the commencement of the meeting.
These questions are among those most frequently asked of LIC boards during AGM seasons:
Performance and Strategy
Board and Investment Manager Remuneration
It is important to note that there are no simple right or wrong answers to these questions. The answers will depend on your own circumstances.
AGM planning and considering the questions that your shareholders are most likely to ask helps the board and auditors be more prepared, keeps your shareholders feeling confident and engaged, and facilitates a smoothly-run meeting.
This update is prepared by the Company Secretarial Team at Boardroom Pty Limited. The update is designed to provide general information and is not designed to replace legal or tax advice or a detailed review of the subject matter nor is it intended to cover all circumstances.
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