Annual shareholder meeting: some practical tips

For the deminor NXT team, April through June are traditionally a very busy period. Shareholders wake up. Usually very late, a few days before the shareholders’ meeting. However, the annual date is fixed by statute.

Our recent survey shows that in Belgium more than 56% of SMEs have a maximum of 2 shareholders, with family SMEs this is as high as 76%. In 60% of SMEs, the shareholders are only operationally active.

At these companies, the shareholders’ meeting is often seen as a legal formality. The meetings are often held “on paper”, with minutes prepared by an outside accounting firm.

For those SMEs with multiple shareholders, where not all shareholders are active in the company, a formal annual shareholder meeting is often more important. Some business leaders see this as a futile effort, while others see it as a unique opportunity to inform and more actively involve their shareholders in the company’s realizations and future possibilities. It is an opportunity to explain the key points of the strategy and the achieved results. It is also the forum to inform shareholders about future prospects, risks and opportunities, planned investments and financial perspectives, including the dividend policy. As an illustration, the deminor NXT survey shows that only 47% of SMEs have defined a dividend policy.

Shareholders in an SME or family business have no scholarship to exit the capital and sell their shares when they are not satisfied with the policy. They make capital available and can therefore expect compensation, in the form of an annual dividend or at least the prospect of the value of their assets increasing. Moreover, the new generation in family businesses is becoming more empowered, asking more questions and expecting family directors to be accountable for the pursued policies.

It is therefore necessary for a company manager or board of directors to thoroughly prepare for the annual general meeting. It is the appropriate platform to engage in dialogue with all shareholders, including those who are not active in the company.

Therefore, some practical tips and focus points:

1. Formal Rules
   Since the amendment of corporate law, it is no longer necessary to send a registered letter of convocation; this can now be done by e-mail. However, the agenda and documents to be discussed must be delivered 15 days in advance.
2. Clear Agenda
   Shareholders who jointly own 10% of the shares may propose their own agenda items at a shareholder meeting.
3. Right of inquiry
   Every shareholder, even those with only one share, has an extensive right to ask questions. The board may not refuse to answer questions related to agenda items.
4. Registration and Questions
   Requesting in advance that shareholders register or deliver their questions in writing is possible. Restricting the right to ask questions is not possible, but delivering written questions in advance is a good practice to allow the board to prepare properly.
5. Participation and Remote Voting
   Since the COVID pandemic, participation and remote voting is possible. This must be organized by the board in such a way that all formalities are validly observed.
6. Minutes
   During the meeting, minutes are taken of the discussions and decisions taken. Shareholders or directors may demand that certain statements or their votes be included in the minutes.
7. At the annual meeting, the financial statements for the past fiscal year are approved.
   The board must prepare to answer financial questions, both about balance sheet items, the income statement and the detailed appendices. When an auditor revisor is appointed, shareholders may count on them to be effectively present to answer their questions

These are just a few tips and concerns. Our belief is that a company cannot grow without happy shareholders. Constructive dialogue at the annual shareholder meeting increases engagement and transparency. In good times this is important, but even more so when the economic context is more difficult. Then the support of all shareholders will be even more important.

We, at deminor NXT, are all set for the 2025 shareholders’ meeting season!

To conclude, we would like to mention that listed companies have very different rules and concerns. The media coverage at these shareholders’ meetings usually causes a little more tension or stress, which creates other dynamics.

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Do you have questions about organizing a shareholders’ meeting? Don’t hesitate to contact us! Our specialized team is ready to assist you with advice and support.