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Back-to-back Adani AGMs irk purists

In the schedule for back-to-back AGMs and the choice of venue that can accommodate less than 0.1 per cent of invitees, many see the reality of the sorry state of corporate India's AGMs

N Sundaresha Subramanian  |  New Delhi 

In an ideal world, close to 400,000 shareholders should on August 11 come together at JB Auditorium on Ahmedabad's Vikram Sarabhai Marg, for three listed Adani group firms are to hold their annual general meetings (AGMs) on that day.

According to the notices filed by the companies, Adani Ports & SEZ's AGM at 9:30 am will be followed by Adani Power's exactly an hour later. The shareholders of Adani Enterprises are slated to meet soon after, at 11.30 am. While the first two have over 300,000 shareholders each, the third has about 88,000. Taking the common shareholders into account, the total number of unique shareholders in the three should be about 400,000.

But the website of Ahmedabad Management Association (AMA), which owns the auditorium, clearly says: "AMA's JB Auditorium is a well-equipped modern auditorium which can accommodate 400 persons."

In the schedule for back-to-back AGMs and the choice of venue that can accommodate less than 0.1 per cent of invitees, many see the reality of the sorry state of corporate India's AGMs.

AGMs are envisioned by law as a platform for shareholders to have their say in running of a company they collectively own.

Most AGMs, even those of large corporations like the Adani group - the three Adani firms together are worth around Rs 36,000 crore - are sparsely attended and rushed through.

"It's obvious they don't expect or allow discussion. Only then can one finish in an hour. It means they are going through the motion. It's a mockery of law. What are independent directors doing," asks Virendra Jain, president, Midas Touch Investor Association.

Notices for the AGMs, reviewed by Business Standard, show there are several important businesses lined up for voting. While Adani Enterprises has 14 resolutions to pass, Adani Ports & SEZ has 13 and Adani Power 12. Several of these are special resolutions and require clearance from two-thirds of members present and voting.

Jain says reading the director's report and going through the routine items alone will take an hour. "All these are with thousands of shareholders. Many of these shareholders are institutions like mutual funds and insurance firms. Even if one mutual fund picks up an issue and initiates a discussion, it could go on for an hour. How can you then schedule another meeting at the same venue exactly an hour later?"

An email seeking comments sent to an Adani group spokesperson on Saturday did not elicit any response, despite subsequent reminders sent on Monday and Tuesday. An executive of the group's public relations associate said the company did not wish to respond.

The new law and the regulator have introduced the provision of e-voting to improve participation of shareholders. People familiar with large AGMs point out that the introduction of e-voting has shrunk AGMs' duration. For example, the AGM of widely held Larsen & Toubro, with its elaborate proceedings, which earlier started at 3 pm and did not end before 8 pm, was over in about three hours.

S N Ananthasubramanian, a senior company secretary, says the introduction of e-voting has brought a sea-change in the texture of AGMs. "Under the e-voting provisions, votes are cast even before the meeting is called to order," he adds.

According to him, amendments or modifications are not possible at the meeting after introduction of e-voting. "Thirty or 40 people attend. Many of them are the usual ones present in many AGMs. They are allowed to make their speeches. Then 500 or so votes are cast in e-voting and the results are mostly same 99 per cent in favour. So, why one hour? You can complete it in an even shorter time," Ananthasubramanian says.

However, the perspective of the regulator has been slightly different. About a year ago, the Indiabulls group was pulled up for conducting six back-to-back AGMs with a gap of 15 minutes each.

Former fund manager and founder of financial content portal, Arjun Parthasarathy, says: "AGMs are a mockery anyway. Management says people come only for snacks and drinks. In the age of social media, why would people take the trouble to attend AGMs. The way these are conducted should change. E-voting has already started; they can also have webinars where people can discuss issues."

A story of three AGMs

Shareholders: 317,393
Resolutions: 13
Start time: 9.30 am

Shareholders: 375,162
Resolutions: 12
Start time: 10.30 am

Shareholders: 88,254
Resolutions: 14
Start time: 11.30 am

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First Published: Thu, August 06 2015. 00:58 IST