AGMs need not be Annual Gluttons' Meetings

Investor group aims to raise standards by guiding shareholders to ask relevant questions

AGMs are for listed companies to meet shareholders to discuss the business and allow interaction between company directors and investors.
AGMs are for listed companies to meet shareholders to discuss the business and allow interaction between company directors and investors.PHOTO: ISTOCKPHOTO
Sias is engaging a team of analysts to research listed companies' annual reports and come up with questions that shareholders should raise during the respective companies' annual general meetings. This would help investors to understand the companies
Sias is engaging a team of analysts to research listed companies' annual reports and come up with questions that shareholders should raise during the respective companies' annual general meetings. This would help investors to understand the companies better and make informed decisions on what to do with their shares.ST FILE PHOTO
Mr Gerald says for too long, retail investors have lacked guidance on the questions they should pose at meetings.
Mr Gerald says for too long, retail investors have lacked guidance on the questions they should pose at meetings.PHOTO: SIAS

Retail investors attending annual general meetings (AGMs) will soon have something more important and exciting to look forward to besides the buffet laid out by the firm.

AGMs are not supposed to be eat-fests, although observers would think otherwise when they see shareholders attending these meetings armed with Tupperware containers to tar pau (take away) some of the goodies.

These meetings are for firms to meet shareholders to discuss ways to improve the business, keep investors updated about the company's annual report and to allow for some interaction between directors and officials and shareholders.


The Securities Investors Association of Singapore (Sias) wants to raise the standards of AGMs by empowering shareholders to understand the companies better and guiding them to ask relevant questions so as to help them decide what to do with their shares.

  • In the spotlight next month

  • To kick-start the initiative, Sias will analyse the annual reports of these 15 firms that will hold their AGMs next month.

    • GP Batteries International

    • Indiabulls Property Investment Trust

    • Jason Marine Group

    • King Wan Corp

    • MTQ Corp

    • MYP Ltd

    • Neo Group

    • Powermatic Data Systems

    • Singapore Post

    • Singapore Shipping Corp

    • Stamford Land Corp

    • The Stratech Group

    • Tritech Group

    • Yoma Strategic Holdings

    • Yongmao Holdings



    SGX has been working closely with industry professionals and associations to raise standards of governance and disclosure of listed companies... We are heartened that Sias is launching this initiative to help shareholders focus on the important issues at hand for AGMs. This will promote shareholder activism and enable investors to draw fruitful insights on material developments in their investee companies.

    MS JUNE SIM, SGX's head of listing compliance.


    Investor education is an important part of Singtel's outreach efforts and we have been a long-time sponsor of Sias' investor education programme... We welcome Sias' initiative, which will help to give investors clarity and encourage focused discussions. We believe this will contribute to building a community of informed investors.

    MS SIN YANG FONG, Singtel vice-president, group investor relations.


    We appreciate Sias' efforts. Retail investors looking to engage company directors at AGMs in more meaningful discussions are likely to find its proposal useful.

    MR COLLINS CHIN, OCBC Bank's head of investor relations.


    We welcome the initiative by Sias to guide investors on the areas of focus and interaction. At UOB, we are committed to maintaining effective and transparent communications with the investment community... We have started to report both our financial and non-financial performance in an integrated manner in our annual report. This allows us to communicate how we create value for all our stakeholders.

    MR JIMMY KOH, UOB's head of investor relations and research.

Sias president David Gerald said: "While the perception is that retail investors are only concerned about the food and not... the annual reports, in reality, that is not the case as more and more of them are seeking accountability from the boards, though in limited areas.

"They need to expand their interest to cover issues relating to risk management, internal controls, independence of the board and sustainability if they want to really know how safe their investments are."

He noted that for too long, retail investors have lacked guidance on the questions they should pose at meetings on critical areas in the annual reports. It has been left to a few knowledgeable investors to do so.

He added: "More retail investors need to participate actively at AGMs. They should, therefore, be helped to concentrate on the main business of the meeting through the analysis of the annual report and seek accountability in the right areas."

Sias believes that many investors are already getting there but many more need to know how to ask questions about the critical issues and seek information from the board about what is actually happening in the companies.

"This initiative will, no doubt, help encourage shareholders to engage and interact with the boards in the right direction. It will help improve the transparency and good corporate governance practices of the company. Sias would, therefore, encourage all companies to address the questions posed by Sias and post them on the SGXNet for the benefit of all shareholders and interested investors," says Mr Gerald.

Mr James Ong, a small investor who attends about eight AGMs a year, welcomes the initiative. He says: "It will definitely help to cut short the work for small investors, like myself, who find it cumbersome to go through the annual reports.

"Most of us are not knowledgeable enough to be able to suss out the pertinent issues to be raised at AGMs. With Sias' help, I will have a better idea."

Furthermore, as many listed SMEs are not covered by analysts who usually raise interesting issues, this initiative will enable shareholders to get an independent source of information on these firms.

In the process, the market will become more sophisticated and attract more investments as retail investors become increasingly discerning.


This initiative will kick off next month with Sias engaging a team of analysts to research the listed companies' annual reports and come up with relevant questions that should be raised during their respective AGMs.

For a start, Sias will analyse 200 firms selected from the pool of firms which hold their AGMs in the next 12 months. Of these, 15 will hold their AGMs next month.

Sias aims to cover 350 firms by mid-2018, 500 by mid-2019, and 600 by mid-2020. By 2021, subject to funding, Sias would have covered all 720 listed firms here.

Besides analysing annual reports, the team will also conduct research and surveys on corporate governance and investor rights issues. In the first year, Sias will focus on covering at least half of the companies within the bottom 40 per cent in last year's corporate governance scoring based on the criteria developed by Singapore Management University using OECD principles, which is published on the Sias website.

The research analysts will pose questions focused on three broad categories: strategy, financials and corporate governance practices.

There is typically a two-week window from the time the annual report is ready and the AGM itself. Sias plans to analyse reports once they are made available and send the questions to the listed firm before its meeting. These questions will also be available on the Sias website for the benefit of shareholders.

The listed firm will be encouraged to answer the Sias questions during its AGM as well as upload the answers on SGX Net on or after the day of the AGM.

As part of its investor education efforts, Sias has been running programmes that explain annual reports and stock investment fundamentals.

Here are some examples of the issues and questions that Sias will pose to the board and management. They will be customised and directly relevant to each listed firm.


These will cover the core business and property investment issues.

• Given the strong balance sheet and the experience of the group, is the group passively waiting for the recovery? Can the group be more proactive and make use of this opportunity?

• What are some of the measures that the group has taken to overcome the challenges? What if this downturn drags on? Can we leverage on our expertise, balance sheet and network to tap into new opportunities?

• What are the prospects of the new buildings? Are we looking to rent them out or to sell? What kind of yields can we expect? Did we exceed the budget?

• How are we going to maximise the value of our portfolio?

• Does the board/management have a strategy to maximise the value of the portfolio, and the potential of the real estate assets?


These will cover segmental reporting, capital management, dividend policy and provision issues.

• Why are the profits shown in the geographical segment but not in the business segment? Showing the profits for geographical but not for business lines is not useful for shareholders to understand the performance of each business segment.

• Can the board comment on why the full set of segmental results for the business lines was excluded?

• Has the board considered what would be the ideal capital structure for the firm?

• What is the dividend policy and can the board explain why it has not managed to have a more stable dividend payout?

• Could the board have taken a more prudent approach to write off assets/goodwill progressively? A belated write-off/down masks the deteriorating business conditions and does not truly reflect the value of the group.

Furthermore, some businesses have a bloodbath attitude, where they would be overly aggressive in writing off assets during bad times. Shareholders should be given an accurate and reasonable assessment of the assets.

• A provision was made. Understandably, the market condition has been poor but this is a relatively big amount. Has the company been more prudent in granting credit? Is there a robust approach to managing our counterparty risk? Realistically, what are the chances of collecting this sum back in the future?


This section will cover succession planning, remuneration, and directors' retirement issues.

• Can the board explain the succession plan? Specifically, can the remuneration committee and nominating committee explain the decision process to re-hire Mr ABC and the terms under which he has been re-employed?

• Has the company complied with the directors' remuneration guideline or has the company explained why it has not complied with it in the annual report?

• Can the nominating committee chairman talk about the search and nomination process for the CEO or managing director position? Do we have a rigorous process to search for the best person for the job, even if it means going outside the family?

• As noted in the annual report, the company's articles of association provides for one-third of its board members to retire from office at each AGM and that all directors are required to submit themselves for re-election at regular intervals at least once every three years. Was it an oversight that Mr ABC has not retired in the past 10 years?


• Can we ask the board to improve on the quality of the annual report, as it is an important document for shareholders?

• Can the board review the current processes and ensure that critical information has not been left out and include the relevant details that would help shareholders understand the performance and the operations of the firm better?

To conclude, AGMs are an important platform for shareholders to understand the companies better, in order to make an informed decision on their investments.

Once shareholders are empowered to ask the right questions, it should draw attention to the more serious matter of the company's business operations, instead of the AGM food fight, which usually garners the most attention.

A version of this article appeared in the print edition of The Sunday Times on June 19, 2016, with the headline 'AGMs need not be Annual Gluttons' Meetings'. Print Edition | Subscribe