Commentary: Making AGM bunching just a number and no longer a governance issue
Date: 02 May 2017

All stakeholders can improve the overall process to ensure a transparent and robust capital market

In recent weeks much has been said in the press about a large number of companies holding their AGMs in the last week of April. According to our check from announcements through Singapore Exchange (SGX), there are about 311 company meetings (AGMs and EGMs) held on the last five days of April this year. Unfortunately, we do not expect the situation to improve as companies and their auditors are required to do more with the introduction of the enhanced auditor’s reporting kicking in, as well as the requirement for companies to “comply or explain” on sustainability reporting. The complaint, therefore, is that shareholders who hold shares in multiple companies are unable to attend AGMs and to participate. A right that must be honoured and good for the development of good corporate governance. Without accountability, a shareholder can never be happy and the company may lose its investors. SIAS fully understands their current predicament.

Does this mean that we just accept the situation as a lost cause? With such a situation deemed hopeless by shareholders, there is a greater responsibility on all stakeholders, such as listco boards, shareholders and regulators, to take action to alleviate the situation to help the shareholders achieve their objectives at AGMs. A shareholder, ideally, needs to vote his shares or at the least, needs replies to its questions on the annual report. What then can each stakeholder do to help the situation?

Listed companies

As a listed company, can it plan the AGM outside the peak period? Most listed company senior management point to auditors as the reason for holding the AGM in the last week of April. Of course, with more and more disclosures and demands on the company, more too needs to be done by the auditors, especially with operations overseas and the need to get confirmation, moving the AGM earlier may not be so easy after all, they say. They also need to ensure all the Board members are available. Nevertheless, companies need to get creative. They can hold the AGMs on Saturdays too to accommodate those who cannot attend during the week. Nothing is also stopping them from holding the meetings in the evenings. Even live webcasting the AGMs, a cost not so beyond a listed company’s budget and well incurred serving the needs of all stakeholders. Companies can be creative and if interested in good investor relations and good corporate governance, should allow shareholders who are unable to attend the AGM to send in their questions on the annual report and reply them at the AGM or post the answers on their website.

Unlike institutional investors who have access to private company briefings, retail investors have fewer opportunities to engage with the senior management and the Board. The Singapore Corporate Governance Code encourages companies to organise “Investor Day” briefings to solicit feedback from retail shareholders. SIAS has been organising pre-AGM meetings for SIAS members at their requests with companies in which they hold shares. Companies engage these shareholders, SIAS members, ahead of the AGM on critical issues, answering their questions.

As the AGM is a formal meeting, there may not always be sufficient time for shareholders to pose questions to the Board. Thus, the company should provide more opportunities to interact with shareholders. They should also entertain Q&A sessions from shareholders before and after the AGM. This need not only be at the AGM period. They should post the questions and the answers on their websites for all shareholders to benefit. There are some companies which do not even have dedicated investor relations function. Companies should be mandated to do so.

Shareholders

What can the shareholders do in this situation? Shareholders, who cannot attend the AGM because of multiple company shareholdings, can seek accountability from the company by sending in their questions and queries at least seven days before the AGM to give the company time to answer their questions. They can also appoint proxies to attend the AGMs on their behalf should they find themselves busy with other AGMs and ask the proxies to pose their questions.

SIAS, on our part, are helping shareholders by analysing the company’s annual report and posing 3 questions in the areas of business strategy, financial performance and corporate governance. SIAS is covering 200 companies in the first year and extending to cover all companies in the next 5 years. Companies are encouraged to address these questions at the AGM and publish the answers on SGX Net. Shareholders can find the companies selected and questions posted on the SIAS website. SIAS also conducts workshops on how to analyse annual reports for retail and novice investors to help them ask the relevant questions at AGMs.

Regulators

The role of the regulator is to ensure that companies abide by the rules to maintain an orderly market. Regulators review the rules from time to time to ensure a robust market framework and where necessary, amend them so that all stakeholders are not disadvantaged.

Companies are to provide at least 14 days’ notice for an AGM with ordinary resolutions and 21 days’ with special resolutions. Companies are to make available the annual report 14 days before the AGM. This requires a relook. Hong Kong allows more time for investors to deal with their annual report by requiring at least 21 days’ notice and have the annual report ready at the same time. While the regulators would not be able to mandate how many AGMs can be held in a single day, they can definitely ensure that investors have more time to read and analyse the annual report and be better prepared to ask questions and to seek accountability from the company.

If indeed the unhappiness is lack of opportunity to be present and pose questions, which is troubling to the shareholder at the AGM, SIAS would suggest that companies are mandated to receive relevant questions from its shareholders or from SIAS on their behalf, at least seven days before the AGM and answer them adequately. This should appease, to some extent, the current unhappiness on the part of shareholders.

In totality, if all the above suggested measures are implemented by the stakeholders, the AGM bunching becomes just a number and not an issue. While we may never solve the issue of AGM bunching, collectively, we can certainly improve the overall process to ensure we have a transparent and robust capital market.



David Gerald
Founder, President & CEO
Securities Investors Association (Singapore)

 
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