Information Circular - Definition
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An information circular is a document that serves as a notice of meeting to a company's shareholders and also outlines the agenda for a company's shareholders meeting. The important issues that will be deliberated on at a shareholders meeting are contained in an information circular. An information circular is an important document that gives shareholders a heads up about the agenda of a meeting and their expected contributions. Through an information circular, shareholders become are of possible happenings in a company and actions they need to take at the meeting. Other names given to an information circular are;
- Notice of Annual (Special) Meeting of Stockholders or
- Management Information Circular.
A Little More on What is an Information Circular
An information circular is sent to all shareholders by the board of directors of a company or the management to inform them about an annual stockholders meeting. In cases of potential acquisitions, directors elections and amendment of a company's charter, shareholders are given notice before time through an information circular. Generally, an information circular provides facts on matters pertaining to a company that will be discussed at the annual Stockholders meeting. It gives a sense of direction to shareholders that will attend the meeting and facts to those that will not. An information circular is often accompanied by a proxy circular, this is a document that stipulates procedures for voting on vital issues or director election.
Information Circular and Annual Shareholders Meeting
The annual general meeting of a company is an important event both for the company and its shareholders. It is where decisions that will affect the future of the company will be made, which will, in turn, have an effect on the position of the stockholders. As a meeting held once in a year, it is expected of a company's board of directors or management to inform shareholders of the schedule of the agenda of the meeting ahead of time. An information circular is used by company management to inform shareholders of AGM and also spell out the activities that will take place at the AGM. It prepares shareholders on important discussions as well as voting processes if there will be any. The information circular is critical in prepping shareholders on points to be discussed. Holding annual general meetings is a requirement for both private and public companies in many states. When an information circular is passed across all shareholders, it is expected to contain these core items;
- Minutes of the previous annual general or stockholders meeting.
- The annual financial statement of the company.
- Decisions made and actions taken in the previous year with the approval of the shareholders.
- The outline of discussions at the current AGM is also called the agenda of the meeting.
- Procedures for voting during directors election.
References for Information Circular