Shareholder rights and benefits
As a shareholder, you may need to make decisions about various rights and benefits offered by the companies you have invested in.
Shareholder rights and benefits can include the following:
- Participating in annual general meetings
- Receiving reports and information
- Dividends and dividend reinvestment plans
- Further issues of shares
- Share buy-backs
What happens at an Annual General Meeting (AGM)?
Australian listed companies each conduct an Annual General Meeting (AGM) when shareholders can participate in decisions such as electing new directors to the board and other resolutions relating to the company’s business.
The Chairperson of the board and company chief executive officer (CEO) usually address the meeting.
You will be sent a notice of when and where the AGM is to be held and can usually participate without physically attending by returning the voting forms sent to you. Many investors see the AGM as a good opportunity to hear what senior management have to say.
Reports and information
ASX listed companies issue annual and interim, and sometimes quarterly, financial reports to shareholders.
Reading these is a good way to keep in touch with the company’s business and future prospects. You can often choose whether to receive a full report or condensed report in either paper or electronic form.
Dividends and dividend reinvestment plans
Most ASX listed companies that pay dividends pay them twice a year, an interim dividend followed by a final dividend once the company knows how much profit it has made.
You can often elect to have dividends direct-deposited into your nominated bank account and some companies provide the opportunity to reinvest your dividends in additional shares, sometimes at a discounted share price.
Further issues of shares
When companies seek to raise additional equity capital by issuing more shares, they often offer the shares to existing shareholders rather than to the general public.
The value of your current shares may be diluted or reduced by an issue because each share you hold will represent a smaller portion of the company after the issue. Companies can also make bonus issues of free shares to shareholders.
Share buy-backs
Established, profitable companies which are not currently seeking to expand their business occasionally have excess profits after paying dividends.
In such cases, they may offer to buy-back shares from shareholders rather than retain the extra capital in the company. The price of the offer is usually related to the current or recent average market share price.
Other corporate actions
Other corporate actions for which companies may seek shareholder permission or make an offer to shareholders include mergers with other companies and demergers of their existing business into two or more separate businesses.
These are often very complex, can affect the share price and distributions to shareholders of a number of companies and you should consider consulting an adviser before making a decision.