More time needed to convene AGMs

On Friday alone, about 100 listed companies will be holding their annual general meetings at various locations around town.

This scramble to hold AGMs in the days leading up to the April 30 deadline affects blue-chips too.

At least six Straits Times Index component stocks - OCBC Bank, United Overseas Bank, Wilmar International, Sembcorp Industries, Thai Beverage and Genting Singapore - hold their AGMs on Thursday.

This sort of bunching of AGMs makes it very difficult for investors holding shares in more than one company to turn up at AGMs.

Share activists are up in arms. Private investor Mano Sabnani noted in a recent letter that the massive overlap of such meetings will prevent shareholders from attending and raising salient questions.

"Companies get away with bad results and little scrutiny of resolutions proposed. Examples would be overly high pay of directors, poorly presented accounts and unauthorised expenditure," he said.

For investors in Singapore, AGM venues are usually only a bus ride away, even though some listed companies hold them in difficult-to-reach industrial estates.

The Singapore Exchange (SGX) strongly encourages investors to make use of such occasions to meet the company's board and management.

As SGX's deputy chief regulatory officer Richard Teng observes, AGMs give shareholders the opportunity to size up a company's milestones and review its business plans.

They can also take the chance to raise issues like the company's strategic direction, the governance structure put in place to safeguard shareholders' interest and key company assets, he added.

So, it seems strange, given the importance attached to AGMs, efforts have so far not been made to space them apart.

Mr Sabnani suggests that one way to solve the bunching problem here is for the SGX to create a system whereby companies book their AGM dates through the exchange - limiting the number of meetings allowed for each time slot on any given day.

Still, before debating the merits of his suggestion, let's consider how the bunching problem arises in the first place.

Currently, SGX rules require listed companies to hold their AGMs within four months of the end of their financial year.

From a regulatory standpoint, this gives investors an opportunity to raise questions on the accounts while they are still fresh.

However, the Companies Act stipulates only that a company - whether listed or not - has to hold AGMs every calendar year, and not more than 15 months after the last AGM.

That means in theory, a company, which hosted its AGM last April, will need to hold its next AGM only by July.

Many listed companies struggle to report their full-year results within the 60-day timeframe after the financial year-end, as mandated by the SGX, because they have to consolidate the results from their overseas operations.

There is also the time-consuming preparation to get the audited accounts out and publish the annual report, as well as the requirement to give shareholders at least 14 days' notice before an AGM can be convened.

As a result, it is not surprising that most companies with a Dec 31 financial year-end only just meet the deadline to hold AGMs on the last week of April - even though they may want to do so earlier.

So it is fair to ask whether the SGX should give listed firms more time to hold their AGMs, like extending the current deadline to five months from the financial year-end, rather than the current four months.

Of course, there will be the usual concerns raised as to whether regulatory standards will be compromised by an extension.

But this has to be balanced against the valuable exposure which an investor is likely to gain from being able to attend such meetings.

After all, many companies take considerable efforts to try to lure investors to their AGMs. Some even host their meetings at five-star hotels and lay on an expensive buffet spread to ensure a good turnout.

So it is ironic that while the SGX encourages investors to attend AGMs, its insistence on a short four-month timeframe from financial year-end to hold them is causing AGMs to be bunched up and preventing investors from attending.

Harmonising SGX listing rules on AGMs to bring them more in line with the Companies Act will be to the benefit of all - listed firms, shareholders and the professionals who need to be present at such meetings.

Otherwise, there will be the same dreary war-cry from stock activists complaining that they have been deprived of their opportunity to attend AGMs because too many are held on the same day.

The SGX should give them no excuse to claim that the bourse operator is standing in their way.

engyeow@sph.com.sg

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