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Corporates can play an important role in educating the shareholders on the importance of an AGM.

As we are into the month of May, a slew of companies with financial year ended Dec 31, 2023, will be having their respective AGM over the next few weeks and right to the end of June 2024, where the statutory window closes.

According to Section 340 (2) of the Companies Act, 2016, every company must hold an AGM within six months from the date of its financial year end and not later than 15 months from the date of its last preceding AGM.

At the same time, a company is encouraged to give a 28-day notice period for its AGM although based on the statutory requirement, a 21-day notice is sufficient, as spelled out in Section 258 (1) of the Companies Act, 2016.

Of course, some corporates, especially among the larger listed companies, have already done and dusted their AGM for the financial year and perhaps this week’s column is of little relevance and only applicable to future AGMs.

What’s An AGM For?

For a listed company, an AGM is required to be held by every company and for the board to present the audited annual financial statements.

This is is merely for information purposes, while resolutions that require shareholders’ approval are those related to the declaration of dividends (if any), the re-election of directors, payment of directors’ fees and benefits, and the appointment or re-appointment of external auditors and their respective fees.

The AGM also deals with matters related to authority to issue and allot new shares, share buy-back as well as those related to recurrent related party transactions.

The above is deemed to be the business of an AGM and every listed company must adhere to it.

On top of it, an AGM is also a platform for shareholders as well as proxies who attend the AGM to ask the right questions related to the company’s business, outlook, or even questions for past performance or issues, as well as those related to financial matters.

In this instance, the Minority Shareholders Watch Group (MSWG) plays a pivotal role and takes on the task rather seriously and effectively to ask the right questions at many AGMs, which among others include the largest listed companies.

MSWG prepares well in advance on issues related to every corporation and summarises its questions to these listed companies covering the business, the financial statements, issues related to sustainability, as well as matters related to corporate governance.

In essence, MSWG acts as a voice for the minority shareholders and even provides guidelines to them as to how they should vote at AGMs.

Treat for Retail Investors

In the olden days, collecting door gifts and having a feast at the buffet station was the highlight of any AGM for retail investors as they looked forward to being “treated” at these annual gatherings.

There was also a time when these retail investors would compare which AGM was the best to attend based on the type of door gifts or vouchers handed out by corporate Malaysia.

Never mind if the company doesn’t pay a dividend but these vouchers or door gifts could be of certain value that will give investors double-digit return on investment.

Before the current board lot of 100 shares per lot, retail investors will buy 1,000 shares of a company with a share price of let’s say less than 30 sen per share for a total outlay of RM300 but be entitled to receive gifts or vouchers worth anything between RM20 and RM200 even.

Back then, some corporates were generous in terms of these gifts, be it in the form of a corporate mug, umbrellas, paperweights, and vouchers in the form of hotel stays or food vouchers that allow shareholders to enjoy some sort of “reward” as a shareholder.

These retail investors were not keen on the agenda of the AGMs held but instead questioned the board on door gifts, food, or even validated parking.

Even analysts and fund managers were treated with gifts those days, especially when attending a corporate presentation and in most cases especially those related to initial public offerings.

It was too common for those attending to be showered with gifts as a show of appreciation by these corporates.

Are Gifts Okay?

In general, most corporates today practice a “No Gift Policy” but there are certainly exceptions to the rule, depending on the occasion, the value of the item, and how it was presented.

For public officials, there are guidelines that spell out what is allowed and not allowed when it comes to receiving and giving gifts. It all depends on the circumstances, value, and types of gifts.

Gifts are in general prohibited but those received in an unofficial capacity are allowed provided the value of the gift is less than a quarter of the emolument or less than RM500.

Of course, gifts valued at more than RM500 received from friends due to retirement, transfer, engagement, and marriage are allowable.

For government-linked companies (GLCs), whether giving or receiving gifts depends on the respective GLC’s gift policy but in general, if the gift received or given is intended as a bribe, it is deemed to be an offence under the Malaysian Ant-Corruption Commission Act, 2009.

Hence, at AGMs, it depends on the intention of the public listed companies as to the purpose of the gift.

While a company may have a “No Gift Policy” if the purpose of the gift is merely a show of appreciation or marketing or creating awareness and of small value (perhaps not more than RM50 each), the gift giving at AGMs should be seen as acceptable.

Nevertheless, shareholders, especially retail investors, should not be expecting these gifts as they are a cost to the company. Instead, they should focus on the agenda of the AGM and question the board on resolutions that are tabled and vote wisely.

Corporates too can play an important role in educating the shareholders on the importance of an AGM and perhaps even communicate beforehand the company’s gift policy.

Pankaj C. Kumar is a long-time investment analyst. The views expressed here are the writer’s own.

The article was first published here.

Photo by ål nik on Unsplash.

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