Threatening shareholders with legal action not the best tactic

I am a shareholder in many companies that are listed on the Singapore Exchange (SGX), but I do not normally attend their annual general meetings (AGMs) or extraordinary general meetings (EGMs) due to lack of time.

However, I applaud those who make it a point to attend. Even the Securities Investors Association (Singapore) encourages its members and all shareholders to attend such meetings so as to know the companies better and ask pertinent questions to the management and directors.

I do not think that their primary goal of attending these meetings is to get free food and drinks or free shopping vouchers. The cost of travelling to these meeting venues and time spent there may not be worth all that.

Neither do I think that they go there to make life difficult for the management and directors by asking tough and difficult questions. They are mostly laymen, not lawyers, and they do not intentionally go out of the way to make defamatory statements or insinuations. They may not even know what is defamatory.

It should be the duty of the company to answer all these pertinent questions. It can choose to decline answering them if sensitive information is involved.

Shareholders should not be threatened with defamation suits or other legal actions if they ask tough or insensitive questions.

Threatening them or indeed following up with legal actions against them will hinder the march of investor activism and lessen public interest in investing in listed companies.

As it is, our SGX market is now in a moribund state, and many retail investors have lost interest.

Surely, there are better ways to engage with concerned investors at AGMs and EGMs than threatening them with legal action.

Vincent Khoo

A version of this article appeared in the print edition of The Straits Times on September 13, 2018, with the headline 'Threatening shareholders with legal action not the best tactic'. Print Edition | Subscribe