The Annual General Meeting Season’s here Soon: These Are the Questions You Need to Ask

The season for Annual General Meetings (AGMs) would be upon us soon.

Besides the nice buffet spread that’s usually found in AGMs, the events do provide shareholders with a great opportunity to meet management face-to-face.

So instead of just going for the food, why not take the chance to check up on the performance of the companies you own shares of, straight from the horse’s mouth?

With that, here are some questions you could consider asking in your next AGM.

What are the company’s future plans?

Although the answer might already be discussed in the company’s annual report, it would still be good to get a sense of the company’s prospects from management.

More important, you may get to find out if the company’s management and board have a short-term or long-term view on the business. A company that focuses too much on meeting quarterly targets might indicate the presence of a management team that’s short-sighted in their outlook. That won’t bode well for the company’s long-term future.

What is the key risk for the company going forward?

This seems like a simple question to bring up to management, but the purpose of the question is really to gauge the honesty of management rather than to understand the risks that the company faces.

If management tries to brush off the question with standardised, politically-correct answers instead of providing detailed, specific risks related to their business, it might be an indication of management’s inability to be honest with shareholders.

What is the company planning to do with its excess cash?

This is a question for, of course, companies with large piles of cash on their balance sheets. It is meant to be a gauge on management’s capital allocation ability.

For instance, if the company has huge expansion plans up ahead which would require the cash but it had still increased its dividend payouts willingly, it might be a sign of poor capital allocation on management’s part.

Investors should always be thinking about whether management is handling the company’s capital in ways that are beneficial for shareholders over the long-term.

While it’s certainly not an exhaustive list, common things that a company can do to would be to 1) not borrow money in an irresponsible way, 2) reduce dividends when necessary, and 3) buying back shares when they are deemed to be undervalued.

Foolish Summary

These are just a few questions you can ask during an AGM. Besides allowing other shareholders to learn more about the company, your questions might also help keep management on their toes by showing them that eyes are watching – this might bring more value to you in AGMs.

But all that said, please do enjoy the food as well!

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim does not own any companies mentioned above.