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Shareholding of 28% on average enough to determine AGM outcomes, study finds

A SHAREHOLDING of 28 per cent is enough to win majority votes at the average annual general meeting (AGM) of a Singapore-listed company, according to a study by an academic and a private investor.

The report on shareholder meetings also found that Singapore-listed companies were relatively prompt in calling annual meetings, although concerns were raised about shareholder participation and the quality of explanations about resolutions.

The report was authored by National University of Singapore associate professor Mak Yuen Teen and private investor Chew Yi Hong. It looked at 701 AGMs and 173 standalone extraordinary general meetings (EGMs) in 2014.

The study found that an average of only about 55 per cent of issued shares actually voted in the 279 AGMs for which detailed polling results were disclosed.

"This means that ownership of about 28 per cent of the voting ordinary shares of an issuer would on average translate to a majority of votes at the meeting," the report explained.

Singapore's four-month deadline for companies to conduct an AGM following their financial year-end is shorter than every other G-7 country - Canada, France, Germany, Italy, the United Kingdom and the United States - except for Japan, which has a three-month deadline.

But the report also found signs of bunching in Singapore, where 76 per cent of all April meetings took place in the last five business days of the month. The report linked clustering to the short deadlines to call meetings as well as the concentration of companies with December year-ends.

"Issuers should hold their meetings before the last week of April if they have a December year-end," the authors wrote.

Most of the meetings were held in the central area of Singapore. To help shareholders participate in meetings, companies that hold meetings outside of the central areas should provide transportation, the authors recommended.

The report also raised a question about Thai Beverage Public Co's holding of shareholder meetings in Thailand. Under Thailand's laws, Singaporean shareholders are not entitled to attend a meeting of the drinks company even via video conference or webcast.

"Given that the right to attend general meetings is a fundamental shareholder right, should SGX allow a foreign issuer to have a primary listing in Singapore if most Singapore shareholders would not have the legal right to participate in shareholder meetings either in person or through a video conference or webcast?" the authors asked.

Although explanatory notes were provided for resolutions to re-elect directors about 58 per cent of the time, the authors felt that the quality of the explanations could be improved.

"Beyond the sweeping statement that the director, upon re-election, will remain in his current role(s), we hope that the issuers disclose the process and the consideration that they have gone through to recommend the directors," the authors wrote.

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