"There are many reasons why investors look forward to attend an annual general meeting (AGM). Some attend because they hope to get free door gifts, while others look forward to the free food.
Nevertheless, there are serious investors who prepare well for an AGM. They are there to seek answers to issues related to the listed companies.
However, some investors feel that it is a waste of time to ask questions during the AGM as company directors will find ways to avoid answering them – for example, issues highlighted by investors in the previous AGM that have yet to be resolved.
We encourage investors to attend AGMs because this is the best time for them to ask questions about the financial performance and/or business decisions of the companies.
Given the time constraints of AGMs, we advise investors to read through the annual reports before attending these meetings.
Investors need to focus on company issues and not on the personalities of certain company directors. If possible, investors should take down notes so that they can refer back to the things that the company directors have promised to do.
Investors also need to examine all the resolutions at the AGM – for example, directors who are newly appointed or those seeking re-appointment.
We need to scrutinise whether these directors have relevant experience and appropriate financial skills as well as their background and reputation in the industry.
One of the most important issues to investors is dividends. We need to check not only the stability of dividend payments but also consistency according to the company’s dividend policy.
Companies need to reward shareholders with good dividends if they are unable to find any good investment opportunities to utilise the excess cash.
Unfortunately, we have seen a lot of companies that refuse to pay special dividends despite having excess cash.
One of the most common questions raised by investors is about directors’ fee. Most of the time, the fee should be the same as in the previous year.
If there are any significant increases, we need to check whether the fees are proportionate to the reported earnings as well as the overall salary expenses.
Given that AGMs are normally held a few months after the previous financial year-end, investors can take the opportunity to ask management about the outlook for the current financial year versus the previous year’s performance.
We can also request the management to elaborate further on the company’s prospects, capital expenditures or special capital calls in the near future.
Lastly, we need to exercise our rights by voting on the resolutions. Sometimes the results of the resolutions may not be in line with our wishes, but at least we have voiced our views.
If minority shareholders are active and show interest in the company’s future, management will likely be more careful in making business decisions, especially on projects that may be viewed as not maximising shareholder value.
Ooi Kok Hwa is an investment adviser and managing partner of MRR Consulting."
Now, you know why Genting M does not tell us why they did not dispose of the USD1.5 million cash hoard they have as dividends or as a bonus issue?. They are going to America!
