Accounting for Law
Health, Charity and Not-For-Profit

How to run a smooth AGM

Small governance changes can translate into big improvements when it comes to the running of annual general meetings, Toronto health lawyer Michael Gleeson tells AdvocateDaily.com.

As not-for-profits (NFP) enter AGM season, Gleeson, a partner with DDO Health Law, says it's a good time for such organizations to turn their attention to these governance issues.

“There are some aspects that groups are having trouble with,” he says. “They can be fixed and I believe they will be beneficial from both an order and governance perspective while minimizing risk.”

Below, he shares some of the lessons that he has drawn from his experience working with not-for-profits on governance matters.

Before the meeting

Gleeson says the old adage about "failing to prepare means you’re preparing to fail" applies to AGMs. By putting in some work ahead of time, he says an NFP can boost the chances of the meeting going off without a hitch. 

If clients come to him early enough, Gleeson can prepare a list of matters that should typically be addressed at any AGM, tailored to the needs and nature of the organization at hand.

“It serves as a checklist that will basically stay constant from year to year, so you can just check things off as you work through them,” he says. “It helps with the organization of the meeting, and serves as a reminder of what you’re supposed to be doing.”  

Gleeson says many not-for-profits overlook their auditors when drawing up the attendance list for an AGM.  

“We would not only encourage corporations to invite their auditors but also urge them to attend in some capacity,” he says, adding that some organizations have learned the hard way the value of their involvement.

“I’ve heard of stories where directors were defrauding the organization but were able to present totally untrue or amended financial statements at the AGM, and nobody in attendance was in a position to question what they were shown,” Gleeson says. 

“Having the auditor attend the AGM is an easy safeguard to protect against fraud.”

In addition, Gleeson says an NFP should distribute a detailed AGM agenda well in advance, indicating which matters need special approvals.

“You want members to have informed opinions,” he says. “For example, if you’re making bylaw changes, then comprehensive black-line versions will allow them to read and understand the changes being proposed. That way, you’re less likely to have people coming in asking questions that could have been answered prior to the meeting.    

During the meeting

Allowing members to propose resolutions from the floor of the AGM is a recipe for a bloated and unnecessarily complex meeting, says Gleeson, who advises clients to bar the practice.

“If members want to put forward resolutions, then they should be given a set deadline prior to the meeting so that the board and executive can consider them and decide whether they are appropriate,” he explains.

“When they’re allowed to be raised from the floor, it’s easy to become sidetracked. It’s also not fair to those members not in attendance if resolutions are passed that they were unaware would be addressed.”

Gleeson says many boards also upset the smooth running of their AGM by seeking approval for items for which they do not need such acceptance. For example, he says many boards will seek member approval for financial statements, despite the fact that only directors are required to accept them.

“Asking for approval when it is not needed is just going to complicate the meeting,” he says. “You’re asking for problems.”  

He also discourages boards from bringing “omnibus” resolutions to seek approval for any action the board has taken over a set period of time, often covering the entire previous year.

“You’re asking members to make an uninformed decision. They aren’t and can’t be aware of all the decisions a board has made, and it’s simply not possible to approve a resolution that comprehensive,” Gleeson says. “It’s viewed as bad practice.”

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