By Ruma Dubey
Adani Ports will be holding its AGM tomorrow, 11th August 9:30 a.m. at J.B. Auditorium, Ahmedabad.
Adani Power’s AGM is also scheduled tomorrow at the same venue but at 10.30 am.
Adani Enterprise AGM is also on the same, same place but time is 11.30 am.
So within a span of three hours AGMs of three major listed companies will be conducted. One hour each? It makes one wonder the purpose itself of holding an AGM? This one-hour time frame for an AM, that too of companies which have some of the biggest market caps in India, are scuttled off in one-hour, that too when there are not only some ordinary but also some special resolutions to be passed, making this entire event of an AGM itself into a mockery.
Remember last year? Indiabulls group held six AGMs, all one after the other and all six concluded within 15 minutes. This baffled one and all, in fact it became a laughing joke and SEBI actually issued a warning. But it did bring into perspective the relevance of AGMs today.
Earlier AGMs meant free gifts and sometimes, accompanied with snacks too. There used to be a virtual mad rush to attend the AGM. But once SEBI banned this practice of gifts and snacks, people attending the AGM numbers have dwindled. So clearly, the temptation to attend the AGM was the gifts and snacks and not the actual proceedings. In fact Adani’s AGM is being held in an auditorium which has a capacity to hold 400 people but invites have been sent to thousands of its shareholders.
The purpose of the AGM – it is usually to pass ordinary resolutions like reviewing the company’s financial performance, payment of dividend, appointment/re-appointment of directors, appointing auditors. There is also special resolution which needs shareholder approvals for issues like appointment for additional director, issue of FCCBs, issue of QIPs, expansions, new plant, increase FII limit and many such significant issues. Thus the AGM is actually a very important meeting as it is the only time, company seeks shareholders approval and the only time in the entire year when the top management is available to take questions.
And therein lay the crux – shareholders themselves are to blame as they never seem to ask relevant questions; that is if they decide to attend the AGM in the first place. They just wax eloquent about the promoter and even the promoters, never ever seem to answer any difficult questions. It would be interesting to see if any shareholder would ask Adani questions about the Australian trouble; maybe not, which is why anticipating nothing of relevance happening, the AGM is just one hour each, back-to-back.
This brings us back to the question – are AGMs relevant today? Yes, it is all the more important to get information, especially when companies are getting more complex and more global. And it has become very important to have a say; as minority shareholders it is imperative that we can overrule some of the self-centered or wrong decisions of the company. Institutional investors always have a say but as minority retail shareholders, AGM is the place where one can voice discontent.
Thus is not right to say that one should completely do away with AGMs; it is required. But companies have to ensure that shareholder participation is increased. It would be worthwhile for companies to put into practice SEBI’s proposal of holding AGMs in multi-cities via video conferencing. Getting shareholders approval via e-voting prior to the AGM should be the way forward.