BUSINESS ARTICLE

An Introduction to AGMs in Malaysia

An Introduction to AGMs in Malaysia

An Introduction to AGMs in Malaysia

firstpagedigital Business Insights, Share Registry

The Annual General Meeting (AGM) is an annual meeting where a company’s shareholders and board of directors come together. It plays an important part in facilitating effective corporate governance in Malaysia, acting as a crucial forum for direct dialogue between shareholders and the management team. With AGMs, companies can enable transparent decision-making and strategic direction setting and solidify investor confidence. In this guide, we explore the regulatory requirements, preparation processes, best practices for conducting AGMs in Malaysia, and how to ensure compliance and foster stakeholder engagement.

Overview of Corporate Governance in Malaysia

The Malaysian Companies Act 2016, which establishes basic requirements for company formation and permits businesses to specify their control structure in their Memorandum and Articles of Association, defines the corporate governance framework in Malaysia. The Companies Act ensures that local businesses operate within a framework that serves the best interests of all stakeholders by emphasising transparency, accountability, and the protection of stakeholders’ rights.

Regulatory requirements for AGMs in Malaysia

The Companies Act 2016 lays the foundation for conducting AGMs. It emphasises transparency, accountability, and shareholder engagement; it ensures companies in Malaysia operate in a manner that is not only compliant but also ethically sound and reflective of stakeholders’ best interests. This backdrop supports a business environment where informed decision-making and strategic foresight are not just encouraged but required.

Businesses in Malaysia must conduct AGMs within six months after the end of their fiscal year according to the Companies Act. These meetings must take place in Malaysia and can be in physical, virtual, or hybrid modes. The regulation sets quorum requirements, which require at least two members to be present, as well as a minimum 21-day notice period for all participants, while a 28-day notice period is advised to enhance corporate governance.

Key Agenda Items of AGMs

AGMs support open communication between a company’s board, management, and shareholders, as well as accountability inside the organisation. Their crucial significance in the field of corporate governance is highlighted by a number of functions and responsibilities.

Election of Directors
Electing or re-electing members of the company’s board of directors is one of the primary functions of an AGM. This ensures shareholders’ interests are accurately represented by the board.
Appointment of Auditors
AGMs include the appointment of auditors for the coming fiscal year so the company’s financial dealings can be transparently and independently verified, maintaining trust among stakeholders.
Approval of Financial Statements and Annual Reports
The company’s annual reports and financial statements are delivered to the shareholders for approval. This gives shareholders a comprehensive view of the company’s financial performance and health while reaffirming the company’s commitment to transparency.
Approval of Financial Statements and Annual Reports

Preparing for an AGM

Before holding an AGM, a company must go through a thorough preparation process, and it usually includes the following steps:

Agenda Setting

The board of directors sets a detailed agenda for the AGM with input from the company secretary, covering points such as financial reporting, dividends and election of directors.

Regulatory Compliance

The company secretary then ensures the AGM’s compliance with the Companies Act 2016 and relevant securities regulations in Malaysia, and verifies all necessary documents.

Communication with Shareholders

The company secretary drafts and sends out AGM notices, which include the date, time, location and agenda, with a minimum 21-day notice period for shareholder preparation.

Proxy Voting Process

Shareholders are given instructions on how to appoint a proxy who can vote on their behalf in case of their absence. The company secretary collects and verifies all the proxy forms.

Enhancing Shareholder Communication

Several efforts are made to enhance shareholder communication leading up to the meeting, including Q&A forums, dedicated hotlines, or information sessions.

Conducting an AGM

Once the preparation stage is completed, the Annual General Meeting (AGM) will be conducted in compliance with a set of formal procedures and protocols, which include:

Meeting Procedures and Protocols

The AGM begins with the chairperson opening the meeting, followed by a roll call to establish the presence of a quorum. The meeting agenda guides the discussion of each item in turn.

Quorum Requirements

A minimum of two shareholders, either in person or by proxy, constitutes a quorum for an AGM unless the company’s constitution states otherwise.

Presentation of Reports and Resolutions

Documents such as the directors’ report and the annual financial report are given to the shareholders. These reports offer a thorough summary of the business’s accomplishments and financial status over the last 12 months. Resolutions are put forward to shareholders for voting after the presentations. These may include the appointment of auditors, the reelection of directors, and the approval of the financial statements.

Shareholder Rights and Participation

Shareholder participation is a key element in any AGM in Malaysia, as it enables stakeholders to have a meaningful impact on the company’s operation and development.

Their participation usually includes the following activities and rights:

Voting Procedures

Voting allows shareholders to exercise their rights and influence the company’s decisions. Shareholders can vote in person or via proxy for each resolution. This could be done via a show of hands or electronic voting.

Resolutions

Resolutions are formal decisions that shareholders vote on during the AGM, which can include the approval of financial statements, election or re-election of board members, mergers, acquisitions, or changes in the company’s constitution.

Q&A Sessions

These sessions enable shareholders and the company’s board of directors to communicate directly. In particular, shareholders can raise questions, seek clarifications, and express concerns regarding the company’s operations, financial health and strategies.

Recent Developments and Best Practices

In recent years, there have been numerous changes to AGMs in Malaysia. The majority of these have been propelled by simultaneous worldwide developments in technology and increased awareness of Environmental, Social, and Governance (ESG) principles.

Virtual and Hybrid Meetings

The adoption of digital formats for has increased significantly around the world, including Malaysia. Even with physical meetings making a comeback in 2023, virtual meetings accounted for 58% of all meetings in Malaysia.

ESG Prioritisation

ESG topics have gained prominence in corporate governance. Shareholders increasingly demand transparency and action on issues such as climate change and sustainable business practices through resolutions at AGMs. Bursa Malaysia has also introduced the new enhanced Sustainability Reporting Framework, aimed at facilitating businesses in embracing global standards for disclosing ESG-related information. By strengthening your ESG compliance, companies can help attract investment, improve your corporate reputation and minimise your risk of penalties for non-compliance.

Best Practice Guide

Bursa Malaysia has released the Best Practice Guides on AGMs, which provide a thorough framework for navigating the changing environment. These principles assist businesses in adopting international best practices, ensuring regulatory compliance, and organising productive meetings. They address useful issues, including how to improve shareholder involvement, how to employ technology for distant voting, and how to enable open dialogue about ESG issues.

Environmental, Social, and Governance (ESG) principles

Challenges and Mitigation Measures

Companies conducting AGMs often encounter several challenges, including securing widespread shareholder engagement and navigating the logistical intricacies of hybrid meeting formats. To tackle these issues, companies in Malaysia are advised to implement different measures for each area.

Enhancing Shareholder Engagement
Companies can leverage technology to make AGMs more accessible, such as digital tools, live streaming, e-voting and interactive Q&A sessions in order to increase shareholder engagement. Companies can also facilitate clear communication by providing agendas and instructions for digital participation in the pre-meeting materials. Last, but not least, mechanisms can be put in place for shareholder feedback so that the AGM procedures can be improved.
Managing Hybrid Meeting Complexities
To manage hybrid meetings more effectively, companies should select a reliable platform that enables both virtual and physical participation. The meeting services provider should provide technical support and conduct rehearsals to ensure a smooth AGM execution.
Ensuring Regulatory Compliance
To guarantee adherence to rules, companies need to stay informed about the instructions issued by Bursa Malaysia and the Companies Commission of Malaysia (SSM). If there is a need, companies should obtain expert advice from professional corporate secretarial services providers like BoardRoom to ensure that you comply with regulations related to AGMs in Malaysia.

How Can BoardRoom Offer Support for Your AGM in Malaysia?

BoardRoom offers comprehensive share registry services, managing more than 350 AGMs and meetings every year in Malaysia. With a strong focus on enhancing engagement, streamlining proceedings, and ensuring regulatory requirements are met, BoardRoom empowers businesses in your AGM preparation.

Contact us today to discuss your AGM needs and make your next AGM a seamless experience.

Related Business Insights