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Virtual annual meetings of listed firms lack transparency and credibility

It should also be mandatory for listed companies to provide responses to all questions put forward by all shareholders


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For the second time in recent months, my questions at the annual general meeting of a listed company went unanswered. It seems that such virtual annual meetings lack transparency and credibility.

The CEOs said they would email replies to the remaining questions raised by the shareholders.

I cannot accept this. Before the lockdown last year, during annual meetings, the chairperson or the CEO had to answer all questions spontaneously.

My questions were:

  1. Two directors on the board also sit on the boards of other companies and are involved in other organisations. Can they effectively serve the company when they are also on the boards of other companies and serving other organisations?
  2. What is the justification for paying both directors’ so much, especially when shareholders are paid so low dividends?
  3. What is their expertise or experience in the industry or in the company’s activities to justify their inclusion as board members?

A few days later, I received an email response to my questions, which I found unsatisfactory.

The company said that more than two directors sit on the boards of other companies. According to the company, their commitment, including time commitment, to effectively discharge their duties is assessed annually by the nominations committee and approved by the board. All the directors attended every scheduled board and board committee meetings in 2020.

I beg to differ as one director was not present at this company’s recent annual meeting.

The company also said that all the directors also comply with paragraph 15.06 of Bursa Malaysia’s main market listing requirements, which state that a director of a listed issuer must not hold over five directorships in listed issuers.

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I responded by asking the company’s senior official how it was possible for a director to diligently and effectively contribute to this company if he or she was on the boards of other entities. Time constraints would not allow a director to serve this company loyally and effectively.

The response to my query on directors’ pay was unsatisfactory. The company said that the directors’ pay reflects their level of experience and responsibilities.  

The company said it would consider any additional responsibilities undertaken such as whether a director was also chairperson of a board committee or senior independent director.

I know two of the directors very well and they have no experience at all in the core activities of this company. So where does the logic of experience arise?

The response to my third question too was unsatisfactory.

The company stated that the board should not be made up of only those with industry experience, as diverse multidisciplinary experience contributes significantly to the quality of decision-making and board effectiveness. The board believes it currently has a good mix of expertise and skills among its members, and it values diversity.

But the two retired senior civil servants on the board have no experience and skills in the company’s main activities. On the contrary, the organisations they had worked for had highly experienced senior civil servants who had a wealth of experience in the principal activities of the company.

Why could the company not appoint these retired civil servants and tap on their wealth of experience? These retired officers would have been able to impart their knowledge and familiarity with the healthcare sector. The only reason they were not appointed to the board is that they lacked much-needed connections to be given such an appointment. It demeans us as a country when such things happen.

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Bursa Malaysia and the Companies Commission of Malaysia should lay down guidelines and stipulate the prerequisites for appointments to the boards of listed companies. The companies should provide a justification for the appointments of each director.

It should also be mandatory for listed companies to provide responses to all questions put forward by all shareholders, whether submitted in advance or spontaneously. Company boards should not give any excuses for not responding to spur-of-the-moment questions raised by concerned minority shareholders.

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Benedict Lopez was director of the Malaysian Investment Development Authority in Stockholm and economics counsellor at the Malaysian embassy there in 2010-2014. He covered all five Nordic countries in the course of his work. A pragmatic optimist and now an Aliran member, he believes Malaysia can provide its people with the same benefits and privileges found in the Nordic countries - not a far-fetched dream but one that he hopes will be realised in his lifetime
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