Dear Sir,
The current lacklustre retail interest in listed companies on the Singapore Exchange can be partly attributed to the way minority shareholders are being treated by the management and the board of directors of certain companies at annual general meetings (AGMs) and extraordinary general meetings (EGMs). The management who runs the day-to-day operations is answerable to the board and, in turn, the board is answerable to the shareholders, who own the company. Investors, minority or majority, should be treated equally and with respect.
Most retail investors are minority investors. Individually, they own only a few shares, but collectively they may own a sizeable chunk of the shares and may be a force to reckon with. They should not be mistreated or worse, bullied or threatened by the management and board of the companies they own.
Some retail investors take the time and trouble to attend these AGMs and EGMs so as to know the companies better and to be informed and kept abreast of past performances and future outlooks. It is also an opportunity for them to interact personally with the management and directors of these companies. At these AGMs, food and drinks are usually provided to compensate them for their efforts in attending these AGMs, but this seems to be the exception rather than the norm nowadays; even shopping vouchers seem to be a rarity. At the very least, the companies can provide some beverages such as coffee, tea and water. After all, one gets thirsty from talking and asking many questions.
Rules of engagement at these meetings should be fair and equitable. Attendees who are shareholders should be given top priority to ask questions, not absentee shareholders who post questions beforehand or share investor groups who are not legal shareholders. They should be given enough time to give comments and ask questions so as to clear any doubts or misunderstandings, and should not be restricted to one question at a time if the questions are related. Allowing them to ask only one question at a time, and asking them to return the microphone and to sit down before their question can be answered smacks of kindergarten mentality.
Furthermore, they should not be threatened with legal action if they were to unintentionally make what are considered defamatory or derogatory statements or insinuations. Most of them are non-legal professionals; the majority are “mom-and-pop” retiree shareholders. In their anger and frustration, they may make unsavoury remarks or ask uncomfortable and tough questions. It is incumbent on management and directors to answer these questions or put those doubts at ease. In certain jurisdictions, for example, Australia, directors are legally bound to address all reasonable questions.
Rebuttals and denials of wrong remarks should be sufficient to correct misconceptions and misinformation. There is no necessity to follow up with defamation suits against their own shareholders, which only serves to focus more unnecessary attention on the companies and the quality of their management and directorship. The constant reminder to shareholders not to make defamatory remarks only serve to heighten the fear of speaking out and asking pertinent questions. Surely, there is nothing to fear of shareholders who only want the truth.
Listed family-run businesses are guilty of this type of leadership failures. It should be better if they can get more professional managers and directors to oversee the operations. Or else, go back to being unlisted private companies. Serious investors should avoid this type of companies.
History has shown that management and directors of companies that threaten their shareholders only bring disrepute and infamy to themselves, and make investors wary of them. Ultimately, the market may lose interest in these companies.
Vincent Khoo
(The writer is a remisier with over 20 years’ experience with a local bank-backed broking firm)
