What is the purpose of an Annual General meeting (AGM)?

Introduction

The Annual General Meeting (AGM) is an essential component in the life of companies. Each year, the partners of a company meet to discuss and decide on the strategic directions of the company. But what exactly is an AGM, and what are its main purposes and functions? This article aims to clarify these points by detailing the crucial role of the AGM in corporate governance.

What is an Annual General meeting?

An Annual General Meeting is a mandatory annual meeting for companies, during which partners meet to review and approve the accounts for the past financial year, as well as to rule on various resolutions relating to the management of the company. This meeting is different from the Extraordinary General Meeting (EGM), which focuses on more exceptional decisions that often require changes to the company's articles of association.

The main objectives of the AGM

Approval of annual accounts :One of the main objectives of the AGM is to review and approve the company's annual accounts. The partners review the balance sheet, the income statement and the appendices. This approval is essential because it validates the financial management of the company for the past fiscal year.
Allocation of results :Once the accounts have been approved, the AGM decides on the allocation of the results. This may include distributing dividends to associates or reserving profits to fund future investments. This decision is crucial because it has a direct impact on the company's cash flow and on partners' expectations in terms of remuneration for their investment.
Renewal of the mandates of managers or auditors :The AGM is also the time when the partners vote if necessary for the renewal or appointment of managers or auditors (if applicable). This process ensures that company management remains aligned with the interests of shareholders.
Approval of regulated agreements :Regulated agreements, which are contracts between the company and its directors or major partners, must be approved by the AGM. This approval is intended to avoid conflicts of interest and to ensure that transactions are in the best interests of the company.

The course of the AGM

The AGM generally follows a predefined agenda, which is communicated to associates prior to the meeting. Here are the typical steps of an AGM:

Invitation of partners :Partners are summoned by mail or by electronic means, with a legally fixed notice (15 days for SARLs and SCI and generally 8 days for SAS). The convening includes the agenda, proposed resolutions, and financial documents to be reviewed.
Presidency and quorum :The meeting is chaired by the director of the company. A quorum, i.e. a minimum number of participants, is required for decisions to be valid. If a quorum is not reached, a second meeting must be convened.
Presentation of reports :Financial and management reports are presented to the partners, by the manager or the auditor. These reports provide an overview of the company's performance and the main events of the past year.
Deliberations and votes :The resolutions are then discussed and put to the vote. Each partner has a number of votes in proportion to his shares in the share capital. Decisions are generally taken by simple majority, except for some specific resolutions that may require a qualified majority.

The importance of the AGM for associates and the company

The AGM plays a fundamental role in corporate transparency and good governance. It allows partners to ensure that the company's management acts in their best interests and respects financial and ethical management standards. For the company, the AGM is an opportunity to strengthen the trust of partners, to align strategic objectives, and to validate the major decisions made during the year.

Conclusion

The Annual General Meeting (AGM) allows partners to express their opinion, to participate in the management of the company, and to ensure that their interests and those of the company are well respected. A well-prepared AGM demonstrates the transparency and responsibility of the company. It is therefore not only a legal obligation, but also an opportunity for dialogue and for strengthening the foundations of the company's future growth.