Introduction

Effective stakeholder engagement and management is vital to corporate governance and a company’s annual general meeting (AGM) can be used as a tool to achieve this goal. Although, the AGM is a statutorily mandated annual meeting of a company’s shareholders,¹ it is an important forum for fostering effective communication and collaboration amongst stakeholders. AGMs engender transparency and trust between management and shareholders and other stakeholders making it possible for long-term growth discussions and resolutions. At an AGM, the directors of the company are expected to present reports in respect of a company’s financial year as well as other statutory businesses.

How to Use Annual General Meetings for Effective Stakeholder Engagement

In Nigeria, the recent issues arising from a notice to hold a virtual AGM of a leading Nigerian bank spotlighted the vital nature of AGMs. A few shareholders expressed concerns with the meeting agenda and even sought judicial intervention. The actions of these shareholders and public comments concerning the AGM confirm the vital role of an AGM to a Company and the need for effective shareholder engagement and management. A few ways an AGM can be used as a tool for effective shareholder and stakeholder engagement and management are:

1. Effective decision making: AGMs provide an opportunity for shareholders to take decisions on crucial matters relating to the company's governance. This may include the appointment of new directors, the approval of auditors, and changes to the company's memorandum and articles of association. By giving shareholders an opportunity to vote on such matters, the company demonstrates its commitment to democratic principles and the importance of shareholder participation in the governance process.
2. Improved shareholder participation: Principle 22 of the Nigerian Code of Corporate Governance 2018 (“NCCG 2018”) encourages the establishment of a system of regular dialogue with shareholders. The NCCG recommends that the board develop a policy that ensures appropriate engagement with shareholders which should be published on the company website.² The AGM is a veritable tool to facilitate dialogue and ensure that shareholder issues or concerns are received and effectively addressed. AGMs also provide an opportunity for shareholders to play an active role in building the future of their investments.
3. Protection of shareholder rights: Principle 23 of the NCCG 2018 encourages equitable treatment of shareholders. Shareholders, irrespective of the size of their shareholding are encouraged to raise concerns, ask questions, and seek clarifications during an AGM. The AGM provides a platform for open dialogue between shareholders and management, fostering transparency and allowing shareholders to voice their opinions or seek information about the company’s operations and performance.
4. Compliance with statutory disclosures: The Companies and Allied Matters Act 2020 requires certain mandatory disclosures to be made at the AGM. Principle 28 of the NCCG 2018 also recommends full and comprehensive disclosures of all matters material to investors and stakeholders. The NCCG 2018 further recommends that the annual report presented to the shareholders includes a corporate governance report that provides clear information on the company’s governance structures, policies and practices,³ disclosures of related party transactions,⁴ and disclosures of ESG activities of the company.⁵
5. Improved corporate goodwill and reputation: An AGM is also an opportunity for companies to build goodwill with their shareholders, stakeholders and the general public. A well-run AGM conveys that a company cares about shareholder engagement and commits itself to transparency. This builds trust between shareholders and management and is beneficial to the company in the long term.

Conclusion

AGMs are vital for fostering transparency, building trust, and strengthening the relationship between a company and its shareholders. Consistency in communication with stakeholders develops trust and is an indication that the actions of the board or management are in the best interest of the shareholders or stakeholders. Companies should avoid approaching AGMs with rigidity and allow shareholders to actively participate in decision-making processes, express their concerns, propose ideas, and contribute to the overall governance and strategic direction of the company.⁶

Companies are gearing towards using their AGMs as an engagement and marketing tool to boost their corporate brand. The AGM of Berkshire Hathaway, an American based multinational conglomerate holding company has consistently been used as an effective shareholder engagement and management tool resulting in improved publicity for the company. Warren Buffet’s record of creating shareholder value has made Berkshire Hathaway’s AGM one of the most anticipated events in the business world.⁷

The annual general meeting should not be viewed just as a statutory meeting but as a key tool to marketing the business of a company and winning the trust of shareholders and stakeholders through effective management.

1. Section 237 Companies and Allied Matters Act 2020 (CAMA 2020)
2. Principle 22.1 Nigerian Code of Corporate Governance 2018.
3. Principle 28.1 and 28.2 Nigerian Code of Corporate Governance 2018.
4. Principle 28.3 Nigerian Code of Corporate Governance 2018.
5. Principle 28.8 Nigerian Code of Corporate Governance 2018.
6. Objectives-of-annual-general-meeting, communication and stakeholder engagement, AGMs,challenges faced by the organization
7. How to Attend Berkshire Hathaway's Annual Meeting (investopedia.com)