Equities

Shareholders do not normally have any rights to be directly involved in the running of the company. However, shareholders can protect the integrity of their investment and indirectly influence corporate decisions by engaging in active dialogue with the directors and corporate management.

"Shareholder activism" is a broad term that encompasses the many ways in which investors have engaged corporate management on a broad array of issues. Concerned investors have been known to use a range of tactics to lobby for greater corporate responsibility, for example:

• dialogue with management
• letter writing campaigns
• attending annual general meetings (AGMs)
• drafting resolutions and requisitioning extraordinary general meetings (EGMs).

In Malaysia, shareholder activism is still in the early stages, but is starting to gain momentum. We are seeing more and more instances where minority shareholders are taking an active role regarding their investment. For example, in 2001 some minority shareholders of a PLC voiced their rejection of the company’s restructuring plan at the annual general meeting that lasted for seven hours. And, in 2002, when a deal by a PLC to buy a stake into a

shipping management company was announced, protests from the minority shareholders resulted in the deal being called off.

Avenues to express concerns

How do you exercise your right to voice your opinions so that you are not being taken for a ride?

Attend shareholders’ meetings, i.e. AGMs and EGMs.

The AGM is the only shareholders’ meeting, which must be held by all companies. It provides shareholders with an opportunity to obtain information and question the directors and senior management regarding the company’s past performance and future plans, and to hold them accountable for their responses.

In addition to voicing their views and concerns on the company’s activities, shareholders should employ their right to vote at AGMs on resolutions tabled in the agenda. This is one way where shareholders can exert some influence on the company. It has been acknowledged, however, that it is not easy for outnumbered minority shareholders to swing sufficient votes to oppose the will of the majority. Nevertheless, this should not deter you from exercising your rights as a shareholder.

On matters of concern that are too urgent to wait until the next AGM, shareholders have the power to requisition for and convene an EGM. Two or more shareholders holding not less than 10 per cent of the issued share capital of the company may call a meeting.