Physical AGMs/EOGMs by Listed Companies
AS per Securities Exchange Commission of Pakistan (SECP)Act 2017, all listed Companies are required to hold open physical Annual General Meetings (AGMs) every year in order to get approved annual accounts and other related matters by shareholders.
Likewise in case of any special business where shareholders’ approval is needed these companies are required to hold Extra Ordinary General Meetings (EOGMs) as well.
Due to this mandatory requirement, the minority shareholders get the rare opportunity to meet, deliberate and communicate with the top management and directors of the companies.
These meetings also give them the only chance to get an insight of management’s business plans, projections and way forward.
Unfortunately, ever since the COVID Pandemic broke out in Pakistan, SECP had discontinued physical meetings and replaced it with virtual meetings only.
This decision was taken in March 2020. Subsequently in February 2021, SECP revised its earlier decision and allowed holding of physical AGMs/EOGMs as well.
However, in March 2021, SECP revoked its last decision and matter relating to physical meetings was left on the sole discretion of listed companies provided they give a satisfactory reason thereof.
The listed companies accepted this directive gleefully and since March 2021 not a single company has held physical AGMs/EOGMs by giving a generic statement that this decision has been taken for the welfare and wellbeing of the shareholders.
Interestingly all listed banks and other financial institutions with hundreds and thousands of branches operating throughout the country under pre-pandemic working hours have also discontinued physical meetings.
Similar is the case with listed brokerage houses who are otherwise open and freely accessible for their customers.
These houses are also holding physical meetings for book building activities very frequently. Nevertheless for physical AGMs/EOGMs they are taking full advantage of SECP directives.
Without being biased or prejudice, I strongly feel that it is a well thought out strategy on the part of listed companies to avoid interaction and other searching questions by the shareholders on their performance where many of such companies are poorly governed.
In view of all above, I wrote to SECP at least four times to allow physical AGMs/EOGMs but its reply was always a strong no.
In my last letter dated 26-8-21, I reminded SECP about the much improved Covid situation where all educational institutions and government offices including SECP are now working normally.
Besides this, all businesses are operating smoothly, transport and air services are back to normal operations and on top of it all high government officials including PM are addressing large gatherings every second day.
Moreover, foreign dignitaries are visiting the country very frequently, meeting their counterparts and are also addressing largely-attended press conferences.
I therefore requested SECP to allow physical meetings under strict SOPs and further to address the fears of Covid, only duly vaccinated shareholders should be allowed to attend the meetings.
This proposal was also in line with the government/NCOC desire to bring the country back to normal owing to a highly successful vaccination drive where about 40% of the eligible population has already received at least one dose of the vaccine.
Unfortunately, SECP has dumped this highly viable proposal in cold storage by giving a simple reply that it will be considered in due course only.
It was quite intriguing and reflects a clear mindset at SECP to shield listed companies from facing their shareholders who are a victim of bad corporate governance by many of them.
I, therefore, invite attention of Federal Minister for Finance, Chairman NCOC and Governor State Bank to look into this all important issue and advise SECP to allow holding of Physical AGMs/EOGMs urgently, of course, under strict SOPs where participation should be restricted to vaccinated shareholders only.
— The writer is Independent Financial Analyst, former Regional Chief of Operations — HBL.