Opinion: Shareholders sidelined by lax regulations on shareholder meetings

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The month of April is usually one of the busiest for investors and for listed companies as it is the month when most of the ‘Annual General Shareholder Meeting’ (AGM) are held.

The past two years, the AGMs held during times of Covid has showed what the authorities and companies need to do to make corporate governance more transparent.

AGMs are times of anxiety for companies that are listed on the bourses as it is a time for investors to scrutinize the workings of the company. That anxiety is right on par with the fear of the regulators.

The Covid-19 pandemic has made companies, investors and regulators all scramble to find ways to deal knock on effects of the pandemic.

Thailand, which currently is facing its most severe outbreak wave, has seen most of these listed companies take a hit from investors to business practices.

No sector of society has been spared by the third wave of the outbreak, from rich to poor. For the investment community, this has been no different. This outbreak has prompted cancellation/postponements and restrictions that are unprecedented.

AGM meetings have had to adjust as well, making a normally busy April, more of a virtual and online affair for these companies.

Adjusting with time

With changing times, it is said that people and regimes must change or they will go extinct. This statement is apt for Thailand and the current situation. 

As the world is changing the authorities be it the Government House or the Securities & Exchange Commission or the Stock Exchange of Thailand (SET), none have the vision to change.

Criticizing the government for its failure to mismanage the overall economy and the outbreak has all been said a million times and a zillion more criticism will come in the days/weeks/months and years ahead.

But what surprises me the fact that the SEC and the SET have seen little if any adaptability to what is happening around the world and how they should adapt to the changing world.

The SEC and SET are supposed to be the regulators and they are the ones that are supposed to protect the small fry like myself or the hundreds of thousands of others like me who have put our faith in the system.

But to our surprise these regulators have failed to do their job.

Take for example the case of me attending AGMs. I own a handful of shares that I hold for years. Being a long-term investor (most of shares I own have been with me for at least 10-years), and one of the key question that I raise at the AGM is ‘give me reasons to hold on to your shares for another 1-3-years’.

The vision and drive of the company’s management and the shareholders is what drives me to hold on to the stock or decide to sell it.

With less than a dozen stocks in my portfolio, attending the AGM is key for me. I try to make  it to all shareholders meetings but lately due to the Covid-19 outbreak in 2020 and 2021 I have tried to avoid physical presence at the meetings.

In 2020, I opted not to go at all. It was right when the world was in a panic mode. If investors remember March 23, 2020 was the day when the global markets tumbled, and the spreading of the virus was the reason for the sharp decline in the global equity markets and Thailand was not spared at that time.

Fast forward it by 12-months and I wanted to attend some of the shareholders meeting only to be met with red tape that can ben compared to the functioning of various ministries in the government.

Over the past few weeks I tried to register for getting into many of the AGMs and the process is cumbersome and at times investors do not even know that the venue of the meeting has been changed to ‘E-AGM’ (electronic AGM).

The SET, which has all the details of investors be it their addresses, email, and even phone numbers does not even have the courtesy to inform the investors that their company’s shareholders meeting has seen a change in venue via these means. The only thing they do is to post things on their website – www.set.or.th.

Last week 2 of the biggest portfolio stocks held by myself changed their venue for the AGM but I only was able to find out at the last minute and scrambled to register for both and managed to get through but not without a glitch. I could not hear anything from the 1st AGM.

The fact was that both these companies used 2 different outsource companies to undertake the AGM. 

When I enquired about what my position would be in case I cannot attend the AGM, I was told that I could simply give my voter’s right to ‘an independent director’ who can vote on my behalf. 

In a country where I have been invited to be an ‘independent’ director for a few companies but after having told the major shareholders of my position as director that I would not keep quiet on matters I don’t agree with the major shareholders, none of these companies that invited me came back to me, I have little if any faith in ‘independent’ directors. So how do companies think I can trust which way they will vote on my shares.

Top-Down Approach 

What the SET and the SET need to do is to force companies to take the steps to use much simpler forms of holding AGM. This is not such a difficult task, especially in this day and age of technological advancements.

A simple inputting of username/password and ID number and possibly the details of the shareholders certificate numbers (sent via email) could be used to verify the shareholders and allow them to participate from anywhere around the world.

This simplistic way of holding AGM could be used even after the Covid-19 situation is over, because in this day and age not everyone is physically present at a particular place all the time and this would also lower the use of proxies to attend the meeting as it would allow the real shareholders to attend the meeting virtually.

Afterall this is the way things are happening around the world. Even business meetings that involve billions of dollars are now being conducted on WebEx or Zoom. So how difficult can it be for system to be set up for shareholders to be on such platforms.

The regulators therefore need to take decisive measures to allow and force all companies to go digital as part of allowing a greater participation of shareholders. This would allow a greater transparency of the way the companies are run.

Corporate Good Governance 

Another aspect of good corporate governance is also to care for the shareholders which seems to be lacking in the current environment. Retail shareholders do not own a big chunk of the listed companies but giving them a fair treatment is something that is part of good governance set up.

The E-AGMs that I attended over the past couple of weeks saw barely 20-30 shareholders attend and one of these companies has more than 50,000 and the other about 30,000 minor shareholders listed as per the SET data.

This means that at best 0.001 per cent of the shareholders of the company with 30,000 shareholders attended the meeting and if one takes the company with 50,000 shareholders then there is one more ‘0’ added in-front of the number (0.0006 per cent).

In what country would this kind of presence be considered to be logical and ethical?

But not all companies are in the basket of bad corporate governance. Another company which I can name is Land & Houses Plc (LH) which held its AGM on April 27th informed the SET that it was holding its AGM as planned (physical) but would limit the number of participants to 20 due to the rules and those attending would be purely based on first come first serve.

But the good corporate governance of this company was evident from the fact that the company allowed shareholders to do advance voting (not just allow the ‘independent’ directors to vote) and also hear and participate in the proceedings via witnessing the live streaming of the AGM on its website.

Most companies have not opted for this free to all witnessing of the proceedings of the AGM but the fact that LH managed to take the bold step to stream is a positive step.

May be the next time around companies could learn a thing or 2 of new technologies to use in their AGMs. Apart from using technology developed by SEC/SET or outsourced companies, the use of free to public applications such as YouTube or even the use of ClubHouse with limited participations could be one way to keep shareholders informed about what the company is doing and would do in the future.


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