Keeping AGMs robust yet cordial in a disclosure-based regime
MOST of the focus on the recent changes to the Singapore Code of Corporate Governance has been on the key areas of director independence and diversity.
These are undoubtedly important; but another area which the Code emphasises also merits mention - shareholder engagement, in particular during annual general meetings.
As Principle 11 of the Code states: "The company treats all shareholders fairly and equitably in order to enable them to exercise shareholders' rights and have the opportunity to communicate their views on matters affecting the company. The company gives shareholders a balanced and understandable assessment of its performance, position and prospects.'' Further, Principle 12 adds that the company "communicates regularly with its shareholders and facilitates the participation of shareholders during general meetings and other dialogues to allow shareholders to communicate their views on various matters affecting the company''. It is worth highlighting that observation of all the Code's Principles is mandatory.
The Code however, does not go so far as to set out the legal boundaries within which companies and shareholders should operate, nor does it provide guidance on the appropriate conduct of AGMs or other company-initiated gatherings. That will be forthcoming in a Best Practices Guide currently being prepared by the Singapore Exchange's Regulation Co, the Singapore Institute of Directors and the Securities Investors Association of Singapore.
Meanwhile, with forthcoming AGMs of companies with a 30 June year-end, shareholders and companies should remind themselves of a few key points so as to ensure their meetings flow smoothly and fruitfully. Perhaps, most important of all is that all discourse has to be conducted with mutual respect through the exercise of proper courtesy. The AGM is an opportunity for shareholders - who presumably have read the annual report and know what is on the meeting's agenda - to meet the company management face-to-face, and to ask questions on financial performance, business strategy, dividend policy, prospects and so forth.
Shareholders and meeting chairpersons have to understand their roles and observe the proper decorum in order for there to be a useful exchange of information. It is therefore essential that shareholders, if they are unhappy with the company's performance, not resort to abusive or inflammatory language and that chairpersons, when possibly confronted with a difficult or belligerent shareholder, have the necessary skills to defuse the situation.
In this connection, shareholders should note the SGX's recent statement on the resolution of a legal dispute between a listed company and shareholder, in which the exchange stated that although the legal principle of qualified privilege applies to statements made at AGMs, the immunity granted does not necessarily extend beyond the meeting. In other words, if defamatory comments are uttered during the meeting the speaker may be protected from legal action by qualified privilege, but this may not be the case if the remarks are repeated later or in other forums such as social media. It is also important that companies at AGMs be as honest and forthright as possible, treat shareholders with respect and exercise patience when dealing with difficult questions. Company officers should ensure they adhere to the spirit of a disclosure-based regime, as prevails in Singapore, during an AGM. Ultimately, the goal has to be to have a robust, constructive but cordial exchange that benefits all parties.
