Why Annual General Meetings are important to investors

Among the many abbreviations used in finance, the AGM is one not to be overlooked - especially not by investors.

The Annual General Meeting (AGM) is a yearly gathering within a company where directors present their annual report detailing the company’s performance and strategy to its shareholders. This is a key moment in every company which can often determine the future of the business. 

By paying close attention to AGMs and the various company strategies, investors have an opportunity to make informed decisions on whether their money is in the right place and if the business goals still align with their own.

Hlelo Giyose, Chief Investment Officer and Principal at First Avenue Investment Management & Tracey Davies, Executive Director at Just Share join Stephen Grootes to discuss the importance of an AGM to investors. 

Listen to the full conversation below: 

Grootes mentioned Barloworld's recent AGM, held in late February, where shareholders voted against a remuneration policy for independent directors and also rejected a buyout offer. Davies noted that it is a rare occurrence in South Africa for shareholders to share the same view in voting against multiple proposals, showing the impact of the annual meeting.

"The AGM is such a crucial moment, precisely because of that opportunity for a public statement," she says. "Not just a public statement by shareholders, but also a public accounting by management of how they have been managing the company, and what the results have been and what the future looks like."

Both Giyose and Davies highlighted that companies' management often hold private meetings with large shareholders before the AGM, resulting in a decision being made before voting can occur. This habit can prove detrimental to share prices, says Giyose. 

"If that's how management chooses to 'govern' the company, it will be found out," he notes. "Investors will account for that on the quality of the company's ESG. This would mean that the potential for any shareholder to hold an independent view and execute it is minimized. Eventually, that will reflect in the company's share price underperforming." 

In summary, the AGM is not only a platform to showcase a company's performance and strategy but also an opportunity to build trust and confidence between shareholders and investors. This strong relationship is vital, as it can lead to higher shareholder value.

An investor's journey is not a linear one. It requires discipline, the will to take risks, and the desire to keep learning - this is where CFI comes in. 

Whether it's diversifying your portfolio, understanding basic technical signals or developing your own trading strategy, CFI has an abundance of educational articles for South African investors at any level of expertise. There are also regular webinars and seminars from experts to help you increase your knowledge and invest in your success. 

For more insight and updates on the everchanging world of investing, make sure you tune in to Investment School, brought to you by CFI, every Thursday on The Money Show with Stephen Grootes (6pm-8pm). 

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