Unlike in the industrial democracies, shareholders' activism in Bangladesh has, of late, taken an ugly turn. Some of the shareholders with only a few stocks are found to team up with the ill motive of creating problems including that of vandalism in the AGMs (Annual General Meeting) in order to force the management of the companies to make the procedure palatable to them. Strangely, if they are not managed beforehand, they will not allow the AGMs run smoothly. This has sadly been the case in a number of AGMs, though not all the incidents got reported in the media.
Many companies, whether at their own will or being forced to come to terms with the so-called shareholder gangsters, now feed these shareholders with benefit of one kind or the other. The genuine shareholders who attend in thin numbers are not allowed to talk, or if allowed, are stopped in the middle of their speeches. If the ganged-up shareholders are not satisfied, the AGMs drag on for hours, most of the time on flimsy issues. If the gangster shareholders are managed the way they want, the AGMs go very smoothly or even end in as little as half an hour's time or even in less than that. All agendas are passed the moment the Chairman pronounces the issues on the agenda. These shareholders have several groups, each group is to be managed in a separate way. Sometimes they compete among themselves as to which group can help out the agendas passed quicker than others. As a result AGMs, the most important event of companies in a calendar year have turned into a farce these days.
Also, the truth is that the AGM-managed parties are hired by some companies. The presiding Chairmen of the AGMs also do not try to protect the minimum rights of other shareholders who attend the AGMs to know genuinely the future programmes of the companies. There is a race to start the AGMs and finish them quickly, as if these events are only routine works. Every year, in every AGM, the same people are the 'proposers' and 'seconders' of the agendas of the AGMs. Companies now are holding AGMs and EGMs together allowing only one hour's time gap between these two important meetings. The management knows everything will be over through 'yes' votes within minutes of the start. So, both AGMs and EGMs are completed within one hour or even in lesser time as already orchestrated by the companies' management and the shareholders' management parties.
This writer took time to attend one AGM of a multinational company recently where the Board of Directors were mostly foreigners. When the Chairman of the board started delivering his speech in English, one shareholder stood up and asked the Chairman to deliver his speech in Bangla, though the Bangla translation of his speech was already distributed among the attending shareholders. For a brief period, there was a chaotic situation, and understandably, for no worthwhile reasons. This scribe came to know later that none was managed for the AGM, and the result was that the AGM was dragged on for five hours, which normally should have been finished within two hours with good discussion on the accounts of the company. The problem is that, no one stands up against these ganged-up shareholders whose only motive is to have something from the companies in return for smooth passing of the AGMs.
In many economies of the world, the AGMs of the companies go on for hours, even days, but here in Bangladesh it turns out to be a non-event, not useful to genuine shareholders. The regulator knows these people who gang up for their own benefit, but no action is taken. The regulator should have its own representative in the meetings to report the proceedings. If these people go unpunished, then holding of AGMs will have no meaning. The management of some of the companies may feel at ease even by paying money, but things should not go that way, they should behave responsibly by refusing to what the AGM management parties want.
Abu Ahmed is Professor of Economics at the University of Dhaka.
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