Annual reports are an integral part of not only the annual shareholder meeting, but also your company's reputation. The annual report helps shareholders make important financial decisions and helps them make informed decisions as to how to vote on corporate matters. Specifically, shareholders view the annual report of a company in terms of measurements, such as earnings per share, intangible and tangible assets and dividend yield.
Shareholders, and the public, will want to review the company's financial statements. They'll be looking for trends in profitability and growth. Is this company growing and moving forward, or is it downsizing? Typically annual reports are issued by publicly traded companies. Privately-held companies don't issues statements for the public to scrutinize, unless absolutely necessary.
Reading an Annual Report
Reading an annual report can be somewhat confusing, but most annual reports typically contain the same basic structure. Expect to find:
The annual report must accurately describe the financial condition of the company and its future direction. FindLaw has put together a questionnaire that will help you determine whether your annual report satisfies the interests of analysts and shareholders.
My annual report is written with its role as a marketing tool in mind, and would be useful to a shareholder recommending my company's stock to a friend or relative.
The more "Yes" answers you gave, the more your annual report satisfies the reported interests of both analysts and shareholders. The more "No" answers you gave, the more you may wish to explore reformatting your annual report to fulfill its potential value to your company.
Seeking Legal Advice
When dealing with corporate shareholders, you'll want to ensure your annual report is accurate and in compliance with the law. Speak to an knowledgeable business and commercial law attorney today if you have any questions.