By Mak Yuen Teen

This morning, I attended the hybrid AGM of Azeus Systems Holdings as an observer. I was invited to attend and had the option of attending in person or electronically, and opted to attend in person. I had also attended its hybrid AGM as an observer in person last year.

I arrived about 30 minutes before the scheduled start at 10 am and was introduced to the Executive Chairman, Mr Lee Wan Lik. I was informed that I was free to ask questions even as an observer.

Three directors – Mr Lee, Mr Michael Yap, the CEO and Deputy Chairman, and Mr Koji Miura, an independent director and audit committee chairman, attended in person. The lead independent director, Mr Stephen Ho, and the third independent director, Mr Chan Ching Chuen, who were both overseas, attended by virtual means – as did certain members of management based overseas, including the group financial controller, Ms Peggy Sam.

The AGM started just after 10 am,  with two test questions pertaining to different AGM modes. The process was clearly explained in terms of how to ask questions virtually (by text or video), how to get technical assistance and provision of an electronic device for those needing one to participate. Mr Yap, who chaired the meeting, first flashed the 8 resolutions at the start of the meeting. The questions then proceeded in the following order – those attending in person, those asking questions virtually by video and finally those asking questions virtually by text. The company continued to entertain questions from those attending in person and virtually until every single question was answered. Understandably, there were some questions that the company was not be able to answer for competitive reasons or to avoid incomplete or selective disclosure.

The Q&A lasted about 1.5 hours before the “live” voting on the resolutions. The voting results were shown with little delay, and all 8 resolutions were passed with 100% of shares voting in support.

I like the way the AGM was conducted – shareholders being shown all the resolutions, all questions raised and answered, and then voting on the resolutions. This is more efficient than meetings where a separate Q&A precedes the voting on each resolution.

As I was given the opportunity to ask questions, I decided to do so. The company clearly has strong management, and the board and management have an international profile that matches the international nature of its business. The good thing  is that the independent directors are not the “usual suspects” (although one had served for 14 years and another 18 years, so board renewal may be in order).  I pointed out that the board only met twice last year, as did the audit committee (the remuneration and nominating committees met just once). I asked if the board is reviewing its competencies as it continues to grow and internationalise. I said that while I do not support box-ticking just for the sake of it, as the company grows and aims to attract more global investors, it should strive to meet higher standards of corporate governance. I pointed out that it is unusual for a company with international aspirations (or any well governed company for that matter), to have a board and audit committee that meet just twice a year. The chairman and CEO explained that there are many interactions among directors outside of board meetings. While that may be so, decision-making , governance and oversight by the board cannot be mainly through informal interactions outside of board meetings.

That being said, I do not have concerns about the company. It appears to be very well managed with a solid and growing business. It is very transparent, works hard to engage with shareholders, and treats them with respect. The board and management were very patient answering questions from shareholders (and from an observer like myself).  They were not defensive and there was nothing about the body language that raises concerns with me (an advantage of a hybrid meeting is being able to observe the body language). The bento lunch provided was more than decent too.

The ultimate test of the transparency of a company, however, is not when it is doing well, but when it is facing challenges. I hope that Azeus will continue to be transparent even if it does hit some rough patches.

I would have love to hear from the independent directors, rather than just management, at the AGM. Further, while I understand that there are still travel restrictions which affect the ability of the other two independent directors, including the lead independent director, to attend in person this year, I hope that the overseas-based independent directors would attend at least the occasional AGM in person in future so that shareholders can interact with them too.

On the two test questions that the company conducted about virtual meetings , the results are not surprising. A total of 78.64% of the shares which voted preferred hybrid meetings, while 16.64% preferred physical only meetings. Only 4.72% preferred entirely virtual meetings. The top 3 reasons for why hybrid meetings should be adopted were “Maximises reach” (33.2%), “Better engagement” (31.31%) and “Greater transparency” (28.64%).

I want to thank the company for inviting me to attend the AGM as an observer. All companies should strive to hold hybrid meetings in the way Azeus does – with live Q&A and live voting. I was given an assurance that I will be invited again in future, even though I asked questions about its corporate governance. I may take up that offer again.