AGM is not an 'annual general makan'

SINGAPORE - Most firms provide refreshments and snacks when shareholders make the effort to turn up for meetings but the lavish spreads some companies lay on are starting to spark bunfights of epic proportions.

Apart from the cost to investors of pushing the boat out, the get-togethers some companies stage at five-star hotels have raised claims that they inadvertently bring out anti-social behaviour among the many investors who attend.

A reader wrote to The Straits Times noting that the adjournment of an annual general meeting (AGM) he attended served as a starting gun, prompting shareholders to bolt out of their seats and make a beeline for the buffet spread in the adjoining room.

A mad scramble for plates and food ensued with some people even whipping out plastic containers and bags to pack the food to take home.

There is a further gripe: To cut down AGM costs, some companies restrict any meals to direct investors only. That means people turning up as observers because they are Central Provident Fund (CPF) or Supplementary Retirement Scheme (SRS) investors are reduced to a Cinderella-like state of watching everyone else happily tucking in.

This sort of discrimination is extremely upsetting for CPF or SRS investors because it implies they belong to an inferior class of shareholder, one who is there only for a free meal.

Reader Vincent Khoo wrote: "The irony... is that these CPF or SRS investors are actually using their own monies to invest in these listed companies. Because the law says that their shares have to be custodised with investment banks, the investment banks end up being the legal owners of these shares."

So whether a person attends as a direct shareholder or an observer because he is a CPF or SRS investor, he should get the same rights and benefits, including the meal, he added.

The Government is now putting in place changes to the Companies Act that would enable CPF investors to attend AGMs, ask questions and vote on resolutions. Banks will also be allowed to appoint more than two proxies to AGMs, thus giving SRS investors whose shares are kept with them the same rights.

A Ministry of Finance (MOF) spokesman said: "MOF is currently evaluating the feedback on the Companies (Amendment) Bill. The Bill will be tabled in Parliament in the second half of 2014."

The proposed reforms will put CPF and SRS investors essentially on the same footing as direct investors whose shares are kept in the Central Depository.

There are about 900,000 Singaporeans with CPF Investment Accounts and almost 92,000 SRS account holders.

So if even a small fraction of them turn up at AGMs, it would add to the administrative nightmare - not to mention the escalating costs - for companies that provide grand buffet spreads at their AGMs.

Part of the problem is that unlike at most functions where the turnout can be roughly estimated, there is no way for a company to tell how many investors are going to turn up at its AGM even though they are encouraged to register their interest beforehand.

What should companies do - disallow CPF and SRS investors who get proxies from their investment banks from the meal table as well?

The AGM buffet spread is a comparatively recent phenomenon - it made its first appearance in the past decade as the bosses of S-chips, as China-based firms listed here are called, threw bountiful feasts to lure investors.

Another observation is that not all AGM attendees are there for the food only. At OCBC's recent AGM, the gathering swelled to around 640 people as the board was peppered with questions over the lender's proposed acquisition of Hong Kong's Wing Hang Bank and the impact this would have.

Similarly, the DBS meeting ran to nearly two hours, as shareholders pressed the bank to give its mom-and-pop customers a higher interest rate for their savings and quizzed the board over the hike in directors' fees.

Surely, it is time to recognise that a strong shareholder culture is taking root in Singapore and there are many retail investors who no longer see their stock investments as merely a financial wager or a ticket to a free meal.

When the Singapore Exchange hosts its own AGM later this year, the timing may coincide with the implementation of the changes to the Companies Act to enfranchise CPF and SRS investors.

It should take the lead by doing away with the usual bento set lunch that attendees have come to expect and stick to offering refreshments and light snacks instead.

Companies should focus on what matters most to investors - their business game plan, shareholder return, corporate governance and performance - and not let their AGMs descend into an annual general makan.

This article was published on May 5 in The Straits Times.

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