India Inc divided on spacing out AGMs

Sebi had frowned on the practice of lumping together meetings; some companies play ball, others don't

Last year, Indiabulls Group held the annual general meetings (AGMs) of six of its companies on the same day, with 15-minute gaps between each. This year, the six meetings are being spread across four different days, in August and September. The JP group, too, held the AGMs of two of its group entities---JP Associates and Jaypree Infratech---on the same day (July 29, 2013), with a gap of five hours between the two meetings. But this time, the two companies held their AGMs five days apart---while Jaypee Infratech held its AGM on September 22, JP Associates’ AGM is scheduled for September 27.

The issue has come into focus following scrutiny of Indiabulls’ meetings last year by exchanges, as well as the Securities and Exchange Board of India (Sebi).

Not every company, however, is playing ball. Anil Ambani’s Reliance group, Adani Group and UB Group have opted to keep their AGMs on the same day, citing shareholder convenience.

“The fact that Sebi has issued a circular is an indication the regulator is sending out a message it is observing such developments. It seems to suggest if companies continue to flout norms to the detriment of shareholders, there might be further action from regulators,” said Shriram Subramanian, managing director of InGovern Research Services.

Amit Tandon, founder and managing director of Institutional Investor Advisory Services India, said, “Shareholders need to have an opportunity to meaningfully engage with the company management. I will not be prescriptive and say each meeting should be for three hours or just 45 minutes, but one thing I will say is shareholders should not be rushed.”

Clarifying its position to stock exchanges last year, Indiabulls had said: “The sole reason for scheduling AGMs of all these companies on the same day (September 30), at the same venue and with short intervals, is to provide comfort to shareholders, save them cost and time, and ensure their participation at all the meetings. Last year, most of the shareholders present at the AGMs of these companies had demanded (subsequently, some had sent written requests, too) the meetings be scheduled without any break so that they could participate in all the meetings.”

An email to the company’s compliance officer seeking additional comment did not receive an immediate reply.

Subsequent to its letter to Indiabulls, Sebi, on August 1 this year, issued a circular to all companies, expressing displeasure at such moves. “Such a practice affects the rights of investors to seek clarifications/hold discussions and, prima facie, appears to be prejudicial to the interests of investors,” it said.

This year, four Reliance Group companies have set their AGMs for September 30, with two-hour gaps. In response to an enquiry by exchanges, the company has said shareholders prefer the AGMs on the same day, to avoid repeated travel for shareholders common to all the companies. It added to ensure there was sufficient time for each meeting, an AGM would only begin after the previous one was concluded.

UB Group has held multiple AGMs on the same day through the past few years. This year, it has scheduled the AGMs of United Spirits, UB Holdings and McDowell Holdings for September 30. On September 4, two other group companies, United Breweries and Mangalore Chemicals & Fertilisers, had their AGMs.

Senior UB Group management officials told Business Standard they hadn’t faced any problems in conducting AGMs on such schedules. Adani Power, Adani Enterprises and Adani Ports & Special Economic Zone held their meetings on August 9 this year. Last year, these companies had held their AGMs on August 8.

Corporate governance experts say AGMs are an important platform for shareholders to interact with company officials, adding these should be given adequate importance. “Sebi and the MCA (Ministry of Corporate Affairs) may need to look into whether companies are giving adequate weightage to AGMs,” said Shriram Subramanian.
BRINGING ORDER TO AGMs

• Indiabulls held AGMs of six group firms on September 30, 2013, with a gap of 15 minutes between each AGM
• Four Reliance group firms have scheduled AGMs on September 30, 2014, with a gap of two hours between each meeting
• After exchanges questioned this, both groups said this was aimed at providing convenience to shareholders