Sunday, August 02, 2015

Making AGMs purposeful

Annual General Meetings are supposed to enable shareholders to get to know their companies better and to give suggestions for better performance of the company. The Board of Directors and the top management may not agree with all suggestions, but they are expected to consider the views of shareholders objectively and also to respond to them.

Sadly, what is observed in many AGMs is the unfortunate fact that a lot of time is wasted over petty issues and consequently major issues are ignored. Thus, AGMs like our Parliament become dysfunctional. It appears that the Boards are only too happy that most discussions focus on peripheral issues like compliments. Some shareholders engage in filibustering giving scant respect to time.

Some meetings are held in small venues. We don't know whether these companies want to discourage members from attending the meeting.

Most Chairpersons do not even attempt to regulate proceedings in a purposeful way. Recently, a well-known company held its AGM in the smaller hall at The Music Academy, Chennai. Many shareholders had to keep standing. The Chairman was insouciant to the melee that was happening outside which interfered with the meeting whenever the only door was opened which was quite often. Was the Chairman doubly happy?

Vital questions posed by the shareholders are left unanswered. Recently, a question was raised about subscription of Compulsorily Convertible Preference Shares with a face value of Rs.500 crore by just one entity. The Chairman preferred to ignore this and was waxing eloquent on conservation of capital by keeping low the dividend payout ratio.

There are a few shareholders who are present in almost all AGMs in Chennai and who make it a point to speak and expose their ignorance. It is a pity that neither the Chairman nor other shareholders object to conversion of AGMs into semi-comic shows.

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