An annual report is the annual legal statement which a business
produces for its shareholders' in order to present its annual
accounts at its Annual General Meeting. The report will therefore
normally include a profit and loss account and balance sheet, and a
directors report and auditors report. This is usually a sleek,
colorful, high gloss publication.
A shareholder or stockholder is an individual or company (including a corporation), that legally owns one or more shares of stock in a joint stock company. Companies listed at the stock market strive to enhance shareholder value. The shareholder concept is the theory that a company only has responsibilities to its shareholders and owners, and should work solely to benefit these people.
Stockholders are granted special privileges depending on the class of stock, including the right to vote (usually one vote per share owned) on matters such as elections to the board of directors, the right to share in distributions of the company's income, the right to purchase new shares issued by the company, and the right to a company's assets during a liquidation of the company. However, stockholder's rights to a company's assets are subordinate to the rights of the company's creditors. This means that stockholders typically receive nothing if a company is liquidated after bankruptcy (if the company had had enough to pay its creditors, it would not have entered bankruptcy), although a stock may have value after a bankruptcy if there is the possibility that the debts of the company will be restructured.
Stockholders or shareholders are considered by some to be a partial subset of stakeholders, which may include anyone who has a direct or indirect equity interest in the business entity or someone with even a non-pecuniary interest in a non-profit organization. Thus it might be common to call volunteer contributors to an association stakeholders, even though they are not shareholders.
An Annual General Meeting, also known as the annual meeting, is a meeting that official bodies and associations involving the public (including companies with shareholders) are often required by law (or the constitution, charter etc. governing the body) to hold. An Annual General Meeting is generally held every year to inform their members of previous and future activities.
Recorded in the annual report, the auditor's report tests to see that a corporation's financial statements comply with Generally Accepted Auditing Practices. This is sometimes referred to as the clean opinion.
Most auditor's reports consist of three paragraphs. The first states the responsibilities of the auditor and directors. The second is the scope, stating that Generally Accepted Auding Practices was used. Finally, the third paragraph gives the auditor's opinion.
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