This article is written in collaboration with SIAS. All views expressed are the independent opinion of DollarsAndSense.sg
As retail investors, we don’t normally get the chance to meet the people helming the listed companies that we invest in. And, rightly so! They are busy executives steering the business to achieve success.
When they do find time to meet with external parties, they (and retail investors, like us) are better served meeting business contacts, prospective customers, suppliers, fund managers, analysts and other people who may benefit the business.
One of the few occasions when company directors are required to take time to meet with retail shareholders is during its Annual General Meeting (AGM). Here are a few questions shareholders may have on AGMs.
What Is An AGM?
AGMs are meetings that public-listed companies are required to hold once a year, at a date not exceeding four months of its financial year end. During an AGM, companies have to comply with legal requirements, such as presenting its audited financial statements, electing and removing directors, approving executive compensation, appointing of auditors and approving other important business resolutions.
AGMs also enable shareholders to engage with the Board of Directors and management, as well as seek accountability through airing their views and asking relevant questions.
When Does A Company Have To Hold Its AGM In Singapore?
Most public-listed companies hold their AGMs during April to May. This is typically because they have a December year-end, and must hold their AGMs within four months after their financial year-end.
This takes into account two other important milestones before the AGM:
– Companies have to announce their full-year financial statement not later than 60 days after their financial year-end.
– Companies must also issue its annual report, as well as give notice of meeting, including the date, time and place, at least 14 days before the date of its AGM.
Who Can Attend An AGM?
Registered shareholders can attend AGMs. One of the most important shareholder rights is the right to attend, speak and vote at a company’s AGM (and other general meetings).
Shareholders who are unable to attend can also appoint a proxy to attend on his or her behalf. Typically, shareholders are allowed to appoint up to two proxies. They must also ensure that the Proxy Form is delivered to the company, typically not less than 48 to 72 hours before the AGM.
What Is The Difference Between An AGM, EGM Or SGM?
Apart from AGMs, companies can also call for an Extraordinary General Meeting (EGM) and Special General Meeting (SGM). Unlike AGMs, such meetings are not compulsory, but are typically required when urgent approvals for its business operations and functions are required to be passed.
How Attending AGMs Help You Make Better Investing Decisions
While we seek to gain an advantage by attending an AGM, we need to understand the Code of Conduct and Best Practice when attending one. This means understanding our lawful rights and knowing what to expect at an AGM, as well as behaving in a responsible manner.
Now that we understand the purpose of an AGM, we look at how attending one can benefit shareholder in making better investment decisions.
# 1 Understand The People Who Are Managing Your Investment
As mentioned above, it better serves the company’s and shareholders’ purpose for c-suite executives to spend their time in the most productive way for the company.
AGMs offer one of the few mandatory opportunities for the Board of Directors to spend time in the same room as retail shareholders. This is where we can meet the leaders of the company to understand their thoughts and perspectives on the business and industry.
By observing their body language and tone, as well as listening to their vision for the company, we can get a grasp of whether they are being transparent and forthcoming, or whether they are treating the AGM as a chore they have to get over with. While not fool-proof, we can use this as an opportunity to pick up on red flags.
Apart from the Executive Directors and Independent Directors seated on the panel, there are usually other important people from the management team seated in the audience. Look at the front row and back row of seats or those standing to identify these people, and try to strike up a conversation with them to find out more about the company.
# 2 Get “Inside” Information
Before you start crying foul, we’re referring to the legal “inside” information from simply getting the perspectives from company insiders here.
While the facts and figures of company news might already have been revealed transparently on the company’s financial statements or press release, the AGM provides shareholders with a platform to clarify doubts or probe deeper to get an informational advantage.
As AGMs are typically “closed-door”, management can be more candid and discuss topics in a less politically-correct manner than when speaking to the media or on public forums. Even if they are not as forthcoming during the AGM, the management team usually stays back after the session to interact with shareholders, and could give more personal responses when speaking to individuals.
# 3 Meet Like-Minded Investors
At a company’s AGM, you will be interacting with fellow retail shareholders as well as potential fund managers invested in the company. This gives you an opportunity speak to them to understand the reasons behind their investment and get fresh perspectives about the company.
We can also listen to the questions they have for the management team and gain insights from the management’s responses.
# 4 Ask Your Own Questions
We have a right to ask any questions that we may have about the company and its operations. After hearing the management team’s response, we will be better equipped to gauge if their interests are aligned with ours, as well as whether they may be acting in good faith.
Management teams who are straight-shooting can come across as decisive and knowledgeable of their business and shortcomings. These management teams also inspire confidence in shareholders. On the other hand, if we get unclear responses or sense that the management team is trying to dodge questions, some red flags may arise.
Asking The Right Questions
To guide us in asking the right questions, we need to be prepared. Here are some easy steps we can take:
Read the annual report: The rules in place require that annual reports be sent to us at least 14 days before the AGM. By going through the annual report, we can better understand how the company fared in the financial year, as well as zoom in on the important segments to help us understand the types of questions we should be asking.
Go on SGXNet: Companies have to post important announcements relating to their business operations on SGXNet. These include quarterly financial results, as well as positive or negative announcements released during the year. We can focus on the full-year results announcement, which may also come with a set of slides to depict its operational highlights.
Visit the SIAS website: Since 2016, SIAS has a “Q&A on Annual Reports” initiative to ask relevant questions to Singapore-listed companies. Leading to more than 788 sets of questions to companies, SIAS has requested that they be answered during their AGM as well as posted on SGXNet for the benefit of all shareholders and potential investors. SIAS has also committed to progressively extending this initiative to cover all SGX-listed companies over the next five years.
After doing this “homework”, we should note down the questions that we want to ask at the AGM. Should we be unable to attend the AGM, we still retain the right to send a proxy to vote and ask questions on our behalf. We are also able to request for the AGM minutes.
While attending a company’s AGM will not necessarily give us the full picture, it certainly serves as an opportunity to build our knowledge on the company and make a better investment decision.