The Annual General Meeting is a central element in the life of a stock corporation. In this article, we will take a detailed look at the Annual General Meeting, explaining its legal basis and highlighting the role it plays in corporate governance.

Definition and purpose

The Annual General Meeting is the supreme body of a stock corporation (AG) or a European Company (SE). It is the forum in which the shareholders, the owners of the company, meet to vote on fundamental corporate decisions and exercise their rights. The Annual General Meeting is governed by sections 118 et seq. of the German Stock Corporation Act (AktG).

Convening of the Annual General Meeting

The General Meeting must be held at least once a year. This Annual General Meeting must be held within the first eight months of the financial year. In addition, the Executive Board or the Supervisory Board may convene an Extraordinary General Meeting if this is necessary in the interests of the Company.

The Annual General Meeting shall be convened by the Executive Board and must be published in the Federal Gazette at least 30 days before the date of the meeting.

Shareholders’ rights

Shareholders have various rights at the Annual General Meeting, including:

• Voting rights: Shareholders have the right to vote on certain matters, such as the appropriation of net income, the formal approval of the actions of the Executive Board and Supervisory Board, capital measures or amendments to the Articles of Association.
• Right to speak: Shareholders have the right to ask questions and make contributions to the agenda items.
• Right to information: Shareholders have the right to request information on matters concerning the Company to the extent that this is necessary for a proper assessment of the agenda.

Agenda

The agenda of the Annual General Meeting contains the items about which the shareholders are informed and which are to be voted on. Typical agenda items include the annual financial statements, the appropriation of net income, the election of the Supervisory Board, and the ratification of the actions of the Executive Board and Supervisory Board.

Resolution

Resolutions are passed at the Annual General Meeting that are binding on the Company. As a rule, resolutions are passed by a simple majority of the votes cast. However, a qualified majority is required for certain resolutions, such as amendments to the Articles of Association.

Virtual general meeting

More recently, virtual general meetings have developed where shareholders are not physically present but follow the meeting online and cast their votes electronically. This was particularly accelerated by the COVID-19 pandemic, which made it necessary to avoid physical gatherings.

Criticism and challenges

While the Annual General Meeting is an important instrument for shareholder democracy, there is also criticism. Small shareholders often feel left out, as large shareholders and institutional investors usually hold the majority of votes. In addition, there is criticism that the Annual General Meeting is often too formalized and offers little room for genuine discussion.

Conclusion

The Annual General Meeting is a central element in the life of a stock corporation. It offers shareholders the opportunity to exercise their rights and participate in fundamental corporate decisions. The proper conduct and organization of the Annual General Meeting is crucial for corporate governance and shareholder confidence in the Company.