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Whether the private
shareholder has any influence on the board of a company is greatly
influenced by the conduct of general meetings of the company. Some chairmen
consider the Annual General Meeting to be a tedious legal formality, when
all the real decisions are made by the board, or after discussions with
major institutions who rarely attend the AGM. Some chairmen even avoid
responding properly to the simplest of questions from smaller shareholders,
sometimes giving the impression it is beneath their dignity to explain such
minor matters, and that they have better things to do with their time.
However, any
shareholder can gain enormous advantage from attending general meetings of
companies, even if it is only to gain information on the operations of the
company, and the skills and personality of the directors, rather than exert
influence on it's affairs. A board that answers questions in full and
listens to the comments of shareholders with an open mind is the ideal. A
board that attempts to curtail discussion or which obstructs shareholders
putting forward their views by manipulating the normal procedures, creates a
sense of dissatisfaction and frustration in shareholders which stimulates
adverse reactions. Of course sometimes directors are evasive with good
reason in that they have something to hide, or at least do not wish to tell
the full story. You may feel that such companies are not those in which you
wish to retain a shareholding of course!
Asking questions at
general meetings appears to be a simple thing to do, and of course it is.
But asking questions that will get a useful reply, or more than a trivial
answer, is more difficult. Raising issues of corporate governance or
business policies also requires that you have done proper research on the
background. For example, it's no good complaining about executives salaries
if they can argue that the figures are directly comparable with other
similar businesses, as has no doubt been determined by the Remuneration
Committee using the services of external consultants. For some tips on how
to put some awkward questions to the board, read the following article:
Questions at AGMs - An Aide Memoire.
Note that if UKSA
Members ask questions at AGMs, you are welcome to mention that you are a
UKSA member, but please do not state that you are speaking on behalf of UKSA
unless you have specifically been authorised to do so by the directors of
UKSA.
An article from our Newsletter in 2003 covering the procedures for asking questions at
AGMs, and for voting, is as follows:
Voting at the AGM. See also the following documents:
Company_Law_2_AGM_Reform_2000
and AGM_Reform_1996. UKSA would like to
see a strengthening of the role of the AGM as a forum for reporting to
shareholders, and as a forum for questioning of directors.
Note that one concern
of UKSA is the poor record of institutional voting at General Meetings. The
Report by Paul Myners to the Shareholder Voting Working Group in early 2004
(which can be seen at
www.manifest.co.uk/myners/myners.htm ) makes proposals to correct many
of the problems and also covers issues such as proxies, electronic voting,
and AGM procedures. However UKSA is not happy that it suggests that "show of
hands" can be dispensed with as we consider that provides a useful
demonstration of shareholder views, and is one of the few ways that private
shareholders can have an impact on the board. Our views are given more fully
in the following article: Voting at the
AGM2.
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