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PR Newswire
01-08-2011, 08:03 AM
Aug 1, 2011
CAI JIN
Listed firms should hold AGMs in Singapore
Shareholders should have an opportunity once a year to query management at meeting
By Goh Eng Yeow, Senior Correspondent
WHEN it comes to holding shareholders' meetings, many listed companies leave no stone unturned to keep their shareholders happy.
Some of them host the meetings at five-star hotels and lay on an expensive buffet spread to lure investors along. A few even pack doggie bags of goodies for participants to take home.
Retail investors usually come away from such meetings touched by the attention that has been showered on them. It shows that the company cares for its shareholders, both big and small, said stock activist Denis Distant.
What matters to management is the pay-off that may be achieved from such a public relations blitz.
To the management, a satisfied investor will be a loyal investor who will stand by the company through good times and bad - to borrow a well-worn business phrase - and this may, in turn, translate into a better share price.
Still, while such investor-friendly listed firms are now firmly in the majority, some investors complain that there are still some companies whose management treat annual general meetings (AGMs) as a chore to get over with - given the pesky queries they often have to put up with at such gatherings.
Some of them hold their AGMs in difficult-to-reach industrial estates, away from public transport. Even so, if an investor is determined enough to make his way to the company's AGM, there is nothing to stop him - unless, of course, the company chooses to hold the meeting overseas.
Surprisingly enough, there are actually listed firms which resort to such a drastic measure.
Take China-based plastic bottler Full Apex (Holdings) Ltd. Since 2009, it has stopped holding its AGMs in Singapore. It held its AGM in Guangzhou this year, and in Hong Kong last year.
True, there may be extenuating reasons for its management to avoid hosting a shareholders' meeting in Singapore, since its operations are based in China - but even so, such unfriendly behaviour is inexcusable.
In late 2009, Full Apex chairman and founder Guan Lingxiang and several other shareholders made a failed bid to delist the company. They could not get enough support at a shareholders' meeting.
Then one month before its Guangzhou AGM in April, the company said it had rebuffed a request from a substantial shareholder to convene a special shareholders' meeting to call off an asset sale.
And two months ago, the company said it was facing pressure from some shareholders to buy up their shares at an independent valuation price.
The manner in which the corporate events had unfolded at Full Apex raises the question as to whether its management is trying to avoid a certain group of acrimonious shareholders.
If that is the case, moving the AGM outside Singapore would not solve the problem. It simply deprives other shareholders of a chance to get an update of the company's operations. In fact, holding a shareholders' meeting here may even help, since management can meet face-to-face with the unhappy shareholders at a neutral venue to discuss the issues which had been raised.
One corporate lawyer said that Full Apex is well within its rights to hold its AGM where it sees fit, even though most of its 2,382 shareholders, according to its latest annual report, are here.
This is because the listing manual of the Singapore Exchange (SGX) is silent on the venue where a listed firm needs to hold a shareholders' meeting. That decision is left to the discretion of the board.
Investors cannot rely on the Singapore Companies Act to protect their rights either. While shares of Full Apex are traded here, it is a China play which had injected its assets into a Bermuda company, prior to listing.
Since it is a Bermuda-registered company, that again negates a need for it to hold its AGMs here.
In view of the Full Apex saga, one question crying out for an answer is whether the SGX should make it mandatory for listed firms to host their shareholders' meetings in Singapore.
Since investors are entrusting hard-earned money when they invest in a listed company, they should at least be entitled to have an opportunity once a year at the AGM to query the management to get a better understanding of the business.
When a revamp of the Singapore code of corporate governance was proposed recently, there was a suggestion to include comments and queries by shareholders and responses by the board and management in the minutes of the AGM.
Such an excellent proposal will be difficult to implement, if other companies should decide to follow in Full Apex's footsteps and avoid holding shareholders' meetings here for whatever reasons.
Similarly, it would also defeat the good intentions behind the recent proposal to amend the Singapore Companies Act to give CPF investors the right to vote at listed firms' AGMs.
It offers investors with another instance of 'buyer beware' when they purchase shares of a SGX-listed company which is registered in a foreign jurisdiction such as Bermuda.
You cannot assume that when in Singapore, the foreign firms listed here will do as the local firms do.
CAI JIN
Listed firms should hold AGMs in Singapore
Shareholders should have an opportunity once a year to query management at meeting
By Goh Eng Yeow, Senior Correspondent
WHEN it comes to holding shareholders' meetings, many listed companies leave no stone unturned to keep their shareholders happy.
Some of them host the meetings at five-star hotels and lay on an expensive buffet spread to lure investors along. A few even pack doggie bags of goodies for participants to take home.
Retail investors usually come away from such meetings touched by the attention that has been showered on them. It shows that the company cares for its shareholders, both big and small, said stock activist Denis Distant.
What matters to management is the pay-off that may be achieved from such a public relations blitz.
To the management, a satisfied investor will be a loyal investor who will stand by the company through good times and bad - to borrow a well-worn business phrase - and this may, in turn, translate into a better share price.
Still, while such investor-friendly listed firms are now firmly in the majority, some investors complain that there are still some companies whose management treat annual general meetings (AGMs) as a chore to get over with - given the pesky queries they often have to put up with at such gatherings.
Some of them hold their AGMs in difficult-to-reach industrial estates, away from public transport. Even so, if an investor is determined enough to make his way to the company's AGM, there is nothing to stop him - unless, of course, the company chooses to hold the meeting overseas.
Surprisingly enough, there are actually listed firms which resort to such a drastic measure.
Take China-based plastic bottler Full Apex (Holdings) Ltd. Since 2009, it has stopped holding its AGMs in Singapore. It held its AGM in Guangzhou this year, and in Hong Kong last year.
True, there may be extenuating reasons for its management to avoid hosting a shareholders' meeting in Singapore, since its operations are based in China - but even so, such unfriendly behaviour is inexcusable.
In late 2009, Full Apex chairman and founder Guan Lingxiang and several other shareholders made a failed bid to delist the company. They could not get enough support at a shareholders' meeting.
Then one month before its Guangzhou AGM in April, the company said it had rebuffed a request from a substantial shareholder to convene a special shareholders' meeting to call off an asset sale.
And two months ago, the company said it was facing pressure from some shareholders to buy up their shares at an independent valuation price.
The manner in which the corporate events had unfolded at Full Apex raises the question as to whether its management is trying to avoid a certain group of acrimonious shareholders.
If that is the case, moving the AGM outside Singapore would not solve the problem. It simply deprives other shareholders of a chance to get an update of the company's operations. In fact, holding a shareholders' meeting here may even help, since management can meet face-to-face with the unhappy shareholders at a neutral venue to discuss the issues which had been raised.
One corporate lawyer said that Full Apex is well within its rights to hold its AGM where it sees fit, even though most of its 2,382 shareholders, according to its latest annual report, are here.
This is because the listing manual of the Singapore Exchange (SGX) is silent on the venue where a listed firm needs to hold a shareholders' meeting. That decision is left to the discretion of the board.
Investors cannot rely on the Singapore Companies Act to protect their rights either. While shares of Full Apex are traded here, it is a China play which had injected its assets into a Bermuda company, prior to listing.
Since it is a Bermuda-registered company, that again negates a need for it to hold its AGMs here.
In view of the Full Apex saga, one question crying out for an answer is whether the SGX should make it mandatory for listed firms to host their shareholders' meetings in Singapore.
Since investors are entrusting hard-earned money when they invest in a listed company, they should at least be entitled to have an opportunity once a year at the AGM to query the management to get a better understanding of the business.
When a revamp of the Singapore code of corporate governance was proposed recently, there was a suggestion to include comments and queries by shareholders and responses by the board and management in the minutes of the AGM.
Such an excellent proposal will be difficult to implement, if other companies should decide to follow in Full Apex's footsteps and avoid holding shareholders' meetings here for whatever reasons.
Similarly, it would also defeat the good intentions behind the recent proposal to amend the Singapore Companies Act to give CPF investors the right to vote at listed firms' AGMs.
It offers investors with another instance of 'buyer beware' when they purchase shares of a SGX-listed company which is registered in a foreign jurisdiction such as Bermuda.
You cannot assume that when in Singapore, the foreign firms listed here will do as the local firms do.
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
