Why AGMs, EGMs Are Important

Foreword from ShareInvestor

This article “Why AGMs, EGMs Are Important” by Teh Shi Ning was first published in The Business Times on  26 Sep 2011 and is reproduced in this blog in its entirety.

Shareholders should make it a point to attend these meetings. TEH SHI NING reports

INVESTING in a company’s shares gives even the least experienced investor a stake, however small, in a company. That status as shareholder comes with attendant rights, one of which is to attend the company’s annual general meetings.

Though a minority of retail investors may still view this right as a free pass to jostle for the complimentary buffet spread after, company AGMs do draw their share of market-savvy shareholders who show up prepared to grill the company’s board and management.

“Beyond rights, it is important for shareholders to have a sense of responsibility,” says Dr Lawrence Loh, associate professor at the NUS Business School’s Centre for Governance, Institutions and Organisations.

“Shareholders should take the effort to be well versed and make constructive suggestions to elevate the company profile and performance,” he says.


A listed company’s annual general meeting (AGM) is required by law, and there are legal provisions which govern how much time can lapse between one AGM and the next.

These are by and large placid affairs, but even so, meetings at which key corporate matters are conducted. For instance, financial accounts and annual reports are presented, board directors and auditors are appointed, directors’ fees are approved, and shareholder dividends are declared at AGMs.

Apart from the AGMs that companies must hold by law, directors or shareholders owning a certain percentage of shares may also call for an extraordinary general meeting (EGM) to deal with urgent corporate matters.

These could be to introduce a change in the company’s name, share buy-back schemes, or the issuance of additional shares. More dramatically, EGMs are sometimes convened to oust key management or directors, or to discuss hostile takeover bids.

Shareholders’ Right

All shareholders are notified of AGMs and EGMs, but attendance is not compulsory. Clearly, shareholders need to show up if they are to fully exercise their rights as shareholders, vote on resolutions and interact with the company’s directors.

But, at any given company’s AGM, it is typical for only 10 per cent of its shareholders to show up, says Jeremy Goh, academic director of the Centre for Corporate and Investor Responsibility, Sim Kee Boon Institute for Financial Economics, Singapore Management University.

“By being personally present at the AGM, shareholders may obtain first-hand knowledge of the company, particularly in its performance and prospects, and of the directors and management,” says Dr Loh.

With EGMs, the benefits of attending are even more obvious, given that the meeting’s agenda will likely have significant impact on shareholders.


Shareholders vote to pass the various resolutions tabled for discussion at AGMs. This is done either by a simple show of hands (where each person who shows up has one vote), or by polling, where votes are allocated according to each shareholders’ stake in the firm.

Proxies can be appointed for these AGMs, if shareholders are not able to attend. But proxies can only vote in polls.

Mr Goh says that shareholders should look out for the “bundling” of multiple proposals to be voted on under a single resolution. “This practice has been widely and correctly criticised. Shareholders should have the right to vote separately on each proposal,” he says.

Being Informed

These meetings of shareholders also allow for questions to be posed to the senior management and board directors of the company. “These are essential for seeking further information and clarifications on any transactions carried out at the meeting, or on the company in general,” Dr Loh says.

In any case, shareholders should realise that they benefit from being involved in AGM or EGM proceedings, “as company directors and management will exercise a higher duty of care in disclosures and in running the company,” he adds.

By “asking questions pertaining to the outlook of the company and the new initiatives taken by the company”, retail investors are effectively gaining knowledge about their investments, which will aid them in making decisions on whether their investment portfolio needs any tweaking.

To be able to engage the directors well and ask pertinent questions, however, investors must be familiar with the company they have put their money into.

The AGM tends to be information-heavy for most firms, as detailed investor information is off-loaded onto those present. But the two main documents – the annual report presenting business achievements and future outlook, as well as the full-year financial statements, are mailed to shareholders before the AGM, and are also released on companies’ websites and on the Singapore Exchange’s site too.

“Besides scrutinising the published information, shareholders may conduct first-hand assessments of the companies at the meetings through the presentations and proceedings,” Dr Loh says.

These observations and interactions ought to paint a clearer picture of how capable a company’s leadership are, and hence how bright its prospects.

Dr Loh also notes that many companies are now “strengthening their investor communication and relations efforts, in addition to disseminating reports at designated intervals”.

In fact, this reaches beyond investor communication to a broader emphasis on nurturing good corporate governance to protect the interest of its stakeholders and shareholders.

“Responsible shareholder activism is indeed the best way forward in ensuring corporate accountability,” Dr Loh says.

And, with an increasing number of firms now shedding the customary hotel buffet spread in favour of handing out packed meals or supermarket vouchers at the door, perhaps retail investors will have to find more value in the AGM than food to show up.