Shareholders unhappy with virtual AGM concept, but little choice available

The Ministry of Corporate Affairs (MCA) had clarified earlier this month that it would be allowing the meetings to be conducted online because of Covid-19

Vinod Dadlani, a 67-year-old, has been attending annual general meetings (AGMs) since he first bought shares in Housing Development Finance Corporation (HDFC), more than four decades ago.

He does not remember a dividend in the first HDFC meeting, but recollects shareholders getting Rs 11 worth of coupons for Sahakari Bhandar, a grocery outlet that has everything a middle-class family needs. While critical of the gift culture, he went to various AGMs in the years that followed, seeing it as the only opportunity for ordinary shareholders to ask tough questions to the management. There may be a deviation from the norm this year.

The Ministry of Corporate Affairs (MCA) had clarified in May that it would allow meetings to be conducted online because of Covid-19. Other regulars at AGMs, too, expressed some regret despite agreeing it was for the best.

Kolkata-based Vinay Bagri has also been going to AGMs, over the last few years. He says physical presence helps pick up on the body language of the management. Also missed would be other intangibles, such as interacting with fellow shareholders.

Amit Tandon, founder and managing director of Institutional Investor Advisory Services India (IiAS), agreed that interactions were richer offline. Other shareholders may rant about the management or highlight flaws. One may not be able to see this to the same degree in a virtual setting, he pointed out. 

“Ideally, it should be physical as well as online. But given the circumstances, this is the best option.” 

Shriram Subramanian, founder and MD of domestic proxy advisor InGovern Research Services, said blocking out dissent in online AGMs would be easier as firms could cite connectivity issues if someone raised prickly issues. He suggested shareholders instead send questions to a third party, like a set of journalists, who could ask them during the AGM to ensure impartiality. “Another way is for an MCA official to oversee the AGM and ask questions. But, this becomes tricky as some may call it regulatory overreach.”  

“...it is better that the show goes on. Deferment could lead to uncertainty and lack of clarity for the next financial year,” said J N Gupta, co-founder and MD of Stakeholder Empowerment Services, a corporate governance advisory. He added e-voting by shareholders before the meeting had already taken some sheen off AGMs. It would be better held after the meeting, he said.

While some use the meeting to touch base with the management, others use it to showcase their poetry skills. Among them is Ashalata Maheshwari. The 84-year old shareholder is famous for making the biggest names in corporate India blush after reciting her verse, with evocative comparisons to the moon and flowers.  She expressed sorrow over physical AGMs being on hold and that the opportunity to interact with management would be missed.  She suggested perhaps she would write them a letter instead.