CFA Institute Releases an AGM Guide for Investors

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CFA Institute, the global association of investment professionals, has released the second edition of its AGM Guide – ‘An Investor’s guide to shareholder meetings in India’.

The second edition of investors guide serves as a reference for shareholders to better understand the nature of meetings and resolutions, so that one can adequately prepare to engage at these events. The guide recognises that shareholder meetings provide a platform for direct participation of shareholders in the affairs of the company, and hold the directors to account through voting, Q&A, and discussion. It provides an overview of resolutions put to vote at shareholder meetings and how shareholders can research important issues before the meetings. It encourages shareholders to participate actively to ensure that their interests are not unduly diluted; and encourage companies to become more responsible and responsive towards the interests of minority shareholders. The guide explains and helps prepare shareholders about i) Annual general meeting etiquettes for shareholders, ii) Their rights as shareholders, iii) Important shareholder resolutions – Questions to consider, and many more.

“Shareholder meetings help facilitate engagement and interaction of public shareholders with the company management and board of directors. Shareholders and those who manage shares for others need to know their rights in order to make the right investment decisions. Informed and engaged shareholders play an important part in improving market integrity by holding Boards and Management to high standards,” said Vidhu Shekhar, CFA, CIPM, Country Head, India – CFA Institute.

“It is part of CFA Institute’s mission to promote good corporate governance. We do this through multiple means, including research, advocacy and outreach. We expect this guide to play an important role as a tool for education and awareness for both professional and retail investors,” added Vidhu Shekhar.

Guidelines for Virtual AGM’s

  • Remember to register yourself as a speaker. If you don’t register in a timely manner, you will not get an option to ask questions anytime later. In a physical AGM, all you must do is show up.

  • Some companies also ask that questions be submitted beforehand. This allows them to prepare, but potentially creates a situation where management can screen out tough questions.

  • Companies may have more control over the engagement in Virtual AGMs, but unless they have the right intent, it doesn’t result in a higher quality of engagement. There are always those who sing poems, ask frivolous queries, or want free gifts, who get priority over others who want to ask more pertinent questions.

  • In a physical AGM, shareholders can judge body language of management in response to sensitive queries. In virtual AGMs, management often shut off their cameras.

  • Some companies had a limit of 1000 shareholders. This can be a limitation where the demand for attendance is higher, and you may need to log in early.

  • There is no way to force management to answer questions. In a physical setting it is a lot easier (in a polite yet firm way) to get companies to answer your questions.

  • There is no way to collaborate with other shareholders on an issue. In physical AGMs, we have banded together to ensure management listens to our concerns. In virtual AGMs, you are almost always alone.

The investor guide is structured to provide a brief introduction to shareholder meetings, including the types of meetings and the associated logistics (such as dates, notice content, means of communication and voting). It describes the rights of shareholders, including the ownership thresholds required for exercising certain rights and provides a brief overview of shareholder resolutions and their types: ordinary, special, or majority of minority. It delves into individual resolutions and provides a short description of the regulations, required disclosures, and some considerations for investors to make an informed decision.

The guide also includes a discussion of virtual AGMs and concludes with a discussion of two key trends which are likely to influence shareholder meetings and resolutions in the years to come – ESG and Stewardship.

The second edition of Investor Guide to Shareholder Meetings in India is culmination of effort by CFA Institute and Institutional Investor Advisory Services India Limited (IIAS), a proxy advisory firm in India, together who conducted research on the latest regulatory developments in India and help update this guide.

About CFA Institute

CFA Institute is the global association of investment professionals that sets the standard for professional excellence and credentials. The organization is a champion of ethical behavior in investment markets and a respected source of knowledge in the global financial community. Our aim is to create an environment where investors’ interests come first, markets function at their best, and economies grow. There are more than 170,000 CFA charter holders worldwide in 164 markets. CFA Institute has nine offices worldwide and there are 161 local member societies.

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