Many AGMs still clustered in last days of April: Study


Published April 25, 2016

Grace Leong, Straits Times, 12 April 2016

Many firms here are still clustering annual general meetings (AGMs) in the final few days of April – making it hard for small investors to attend multiple meetings. A new study has found the practice – firms leaving it till the last few days to meet an AGM deadline – improved marginally last year over 2014, but is still a severe problem.

The report was authored by National University of Singapore Associate Professor Mak Yuen Teen and private investor Chew Yi Hong. It looked at 711 AGMs and 195 extraordinary general meetings last year.

The report found that about 323 AGMs were scheduled for the final five business days of April last year. The yearly bunching of AGMs occurred as 456 or 64 per cent of the 715 companies listed on the Singapore Exchange (SGX) had a Dec 31 year-end, so they must hold an AGM meeting within four months of that date – that is, by April 30.

“Looking at AGMs since 2010, clustering in April peaked in 2013, based on the percentage of meetings held in the last five business days. While there has been an improvement in the last two to three years, the improvement is too small to make a difference to the ability of shareholders holding shares in multiple companies to attend more meetings,” the report said.

AGMs are important for retail investors as they are probably the only time they get to meet the board and management. “If shareholders do not attend and vote their shares, it will diminish the accountability of directors,” Prof Mak said.

Clustering of AGMs is worse when there is less time to hold the AGM after the financial yearend. South Korea and Japan allow for three months – compared to four here – so they are worse in terms of clustering. Thailand and Italy give four months.Australia gives five months; Hong Kong, Malaysia and Britain give six months. So bunching is not as bad in those countries, he noted.

“I personally lean towards a five-month deadline – but we will need to ensure that companies do not then just shift to the last week of five months. Hence we have a recommendation that regulators should consult to see if we should allow five months, and we can then discuss how to get companies to spread out rather than all choose the last week,” he added.

But there has been some improvement. Based on issuers that have announced their AGMs for April next year, more are holding their AGMs earlier in the second week of the month, compared with the same period last year, Mr Chew noted. Furthermore, the study shows that some issuers have adopted exemplary practices to improve shareholder participation and rights, such as providing detailed minutes of meetings soon after their AGMs. But adoption of this practice remains very low, Prof Mak said.

In comparison, issuers in other developed markets often provide much better explanatory notes for key resolutions such as those relating to director elections and increase in directors’ remuneration, and the rationale for such resolutions, he said. Singapore issuers are also laggards in using technology to improve shareholder participation, such as webcasting of meetings and electronic online voting of shares.

“A successful AGM needs to achieve the following purposes: reporting to shareholders about company matters; providing an opportunity for shareholders to ask questions and enabling shareholders to exercise an informed vote,” Mr Tan Boon Gin, Singapore Exchange’s chief regulatory officer, said. He noted that the study takes a “good hard look at how the timing, running and form of an AGM can affect the degree to which these purposes are achieved. SGX will… consider the recommendations of the report.”

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