Of food, gifts and family fiefdoms

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Shamsul Huq Zahid
Stakeholders and others concerned were quite curious about the first annual general meeting (AGM) of the country's largest listed company, in terms of shares, the Grameenphone (GP).
Making all the arrangements for nearly 110,000 shareholders was hell of a job, particularly when troubles do erupt at times at the AGMs of many listed companies. The GP management, apparently, was aware of that. Yet many feared troubles because of the enormity of the event.
But belying all speculations, the GP AGM went off smoothly on June 8 last. An eight inch-four column advertisement published in a number of newspapers on May 13 last did the trick and spared the GP management of any possible embarrassment.
The advertisement gave details of the AGM-its time and venue. Other listed companies do also publish similar ads. Yet the GP ad on AGM contained a special note that has not been found in the AGM-related ads published so far.
The GP management informed its shareholders through the advertisement that it would not serve food or offer gifts to its shareholders at the AGM since the securities law bars a listed company from doing that.
The advertisement, actually, disappointed a section of shareholders who are more interested in getting foods and gifts than knowing about the financial health of the companies in which they have their stakes or grilling the management for their failures, if there is any. This section of shareholders, seemingly, decided to skip the GP AGM, making things rather smooth for the company management. Nearly 45 per cent of all the shareholders, recorded as on April 08, 2010 attended the GP AGM.
But troubles over distribution or food and gifts among the shareholders at the AGMs of the listed companies do take place very often. Sometimes a section of shareholders even demand conveyance money from the management of listed companies.
The unhealthy trend, actually, is the creation of a section of listed companies. These companies do resort to some bad practices either to keep the shareholders satisfied or discourage them from asking 'unpalatable' questions. At many AGMs, some shareholders are found spending a lot of time to criticise the management for serving poor quality foods at the AGM or offering cheap gifts to them.
Ideally speaking, the AGM of a listed company is supposed to serve as an accountability forum. The shareholders of the company concerned prior to attending the AGM should go through the annual report, generally made available to them beforehand, thoroughly and ask the management concerned about the financial health, performance, future plans etc.
Unfortunately, the SEC, which is to enforce the rules concerning the AGM of the listed companies, has not been able to carry out its duties and responsibilities. The Commission is mandated to follow all the proceedings and developments at the AGM of the listed companies. It is rather surprising that the SEC has not taken punitive measures against companies offering foods and gifts among their shareholders.
It is alleged that many investors who are in the know about inside developments of many listed companies do not dare to attend the AGMs and ask questions because of the unruly behaviour of the musclemen hired by the management.
All those unhealthy developments are, actually, signs of weak corporate culture. The style of managing many listed companies is not different from that in the case of privately owned companies. The will of the general shareholders is hardly reflected in the operations of those companies. Listed companies are supposed to be out of family dominance. Yet there are a good number of companies that are being treated as family fiefdoms.
So, it is, indeed, essential to make new laws and update the old ones and enforce the same properly to help flourish corporate culture. As far as enforcement is concerned, the SEC needs to act firmly and in an unbiased manner. The securities regulator cannot abdicate its responsibilities by citing reasons such as non-availability of logistics and manpower for it now earns a hefty amount annually as fees and fines.
Notwithstanding the fact the law empowers the finance ministry to meddle into SEC affairs, the former should give the maximum possible freedom to it to operate independently in dealing with securities-related issues.
The capital market is expanding fast as funds, black, grey and white, are flowing into it endlessly. So, managing its affairs has become an important issue. The situation calls for strengthening the capital market regulator, in terms of both manpower and policy support. The government must not overlook this vital need.