Published April 28, 2009

Open the door to shareholders' meetings, please

By LYNETTE KHOO

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ONE notable thing about the shareholder meetings held by listed companies here is that many still do not allow the media to be present, not even as observers.

Some companies have justified this closed-door policy, saying that these meetings are family affairs that should be kept private and admit only shareholders. But one wonders if this is a good enough reason to bar media from these meetings. Certainly, the media has a vested interest in this issue, but the question also is whether the interests of shareholders as well as the wider investing public are served by such a stance.

Events at Guangzhao Industrial Forest Biotechnology Group's annual general meeting (AGM) last week put the issues in sharp relief. The company was openly rapped by shareholders present at the meeting for not allowing reporters in. The lock-out was perceived by shareholders as a lack of transparency on the part of the management. Thankfully, BT managed to get into the room unnoticed, but other journalists were not so lucky. So shareholders pressed the management repeatedly on when they were going to allow the reporters to enter the room. They even resorted to a show of hands to support opening the doors to the journalists. One shareholder asserted: 'If the company has shareholders' interest at heart, it should be transparent and let the journalists in.'

Of course, Guangzhao shareholders already had other reasons to be unhappy. Their discontentment with management stemmed from the trading suspension of Guangzhao shares since last September - a move to avoid further margin calls on shares pledged by the group CEO and the chairman for personal loans. There was also a default on convertible bonds.

While Guangzhao's management was keen the keep the meeting 'private' - not surprising given all the negative developments - it was not what shareholders wanted. They wanted the media there to record the discussions on the various issues for greater transparency, and of course, to have their grievances aired.

This tension was seen at other companies too. NEL Group, another troubled company, also locked journalists out of its extraordinary general meeting (EGM) in February. NEL was alleged to have been involved in 'round-tripping' transactions by another Singapore-listed Malaysian firm, Advance Modules, to cover up a fake sales record, according to a report by KPMG, who were special auditors to Advance Modules.

Given the developments, the EGM became an event of interest to investors, but the press was kept out of the meeting.

Regardless of what the news might be, it may be argued that it would be good for companies in general to let the media into their AGMs and EGMs. While companies have every right to bar the press from attending their meetings, this is certainly not in the spirit of corporate transparency. And sometimes, this only raises the question of whether the company has anything to hide. Of course, there is nothing to stop journalists from getting into these meetings as proxies of shareholders, but that sometimes can lead to awkward or even unpleasant situations, when management discover there are journalists in their midst.

The point here is that letting journalists attend AGMs and EGMs will help in the dissemination of useful information to the investing public, which can only be a good thing. With AGMs mostly being held on weekdays, shareholders who hold full-time jobs may not be able to turn out for these meetings, thus missing out on what was discussed. Companies can release their AGM minutes to all shareholders by putting them up on the SGX website. But few currently do that. And even when they do so, there could be the temptation to highlight information that is positive while skirting the not so positive issues.

It is heartening to note that some companies do adopt an open-door policy when it comes to shareholder meetings. CapitaLand and ST Engineering, for instance, recently allowed journalists to attend their AGMs. The local banks and SingTel go one step further and formally invite journalists to their meetings.

By and large, many more companies choose to lock journalists out, and admit them grudgingly when they turn up as proxies. But opening the door, rather than slamming it shut, is probably the better option in the longer-term, if companies want to win trust and confidence from the market.