By: Shah A. Hasan F.C.A.
The equivalent Word of Shareholder is “member” which has been deined in detail in Section 2 (200 of the Companies ordinace 1984 and includes every person to whom Share(s) is allotted or who becomes the holder of any share, scrips or other security which gives him a voting right in the Company and whose name is entered in the register of members. In common parlance a shareholder is a person in Pakistan who holds Share, Scrip or other Security in a Company listed in Karachi, lahore or Islambad Stock Exchange (s) whether limited or not.
Judicial activism is a very common word used these days which relates to vibrant, conscious and active judicial activities. This fraternity (lawyers & Civil Society) was instrumental in getting restored, the Chief Justice and other Judges of apex court of Pakistan recently. Shareholders activism recently is born and is invant giving signals to the listed Companies to mend their ways in holding Shareholders meeting according to the law, rules and regulations and not to undermine Shareholders right and interest especially minority Shareholders. The management of listed Companies is violating the rules of conducting Shareholders meeting especially the annual General meeting and the Regulatory Authorities especially SECP and all the three Stock Exchanges of the Country adopt stony silence and are partners in this process but now a group of Shareholders have formed an organization named as “Listed Company Shareholders Association” and is challenging the wrongdoing of listed companies, recently this association was successful in preventing the management of two big listed Banks in steam rolling the agenda of annual general meeting. In one case the management of a Bank whose meeting was held on 28.3.2012 run away from the venue of the meeting without transacting any ordinary and special business and is drumbeating that they have been successful in passing all the resolutions which is complete lie.
A big Bank whose AGM was held on 30.3.2012 the Shareholders forced the President to leave the room because his terms and conditions of service ws being discussed. The management of listed Companies do not know that method of conducting AGM or they internationally do so because there is nobody to challenge them and further the Regulatory Agencies connive their violations of law and rules. More often than not the companies does not send the Annual Report under section 160 of the Companies last AGM is provided just before the start of AGM and Shareholders are asked to confirm the minutes which interntionally contains blunders and misstatements of facts of las AGM. SECP in this respect should take congnizance of these matters and shoulder force the Management to send required documents i.e. Annual Report & Minutes of last AGM with Urdu translation because simple posting of these informations on Company’s website is not enough in view of low literacy rate in Pakistan. Further, there is very common practice adopted by the listed Companies to bring their security staff, unauthorized official and tough guys in the meeting to intimidate the Shareholders. SECP should make it sure and advice the management of listed companies that no non-Shareholder should attend the meeting. Please note that only the Chairman of Board, President / Chief Finance Officer and Secretary of BOD or any member of BOD as per rules can attend Shareholders meeting.
The listed company Shareholders Association has been formed to creat a cordial relationship between all the stakeholders expecially between the minority Shareholders and the listed company. Some of the objectives of the Association are:
- To solve the problem of Shareholder in opening CDC Account, conveting physical share in CDC Account and transfer for Shares on the death of a Shareholder.
- To keep s cordial and healthy relations between the listed Compnay and Shareholders and discuss with the management the mechanism of holding shareholder’s meeting according to law and rules.
- To raise voice against wrongdoings mismanagement, corruption and loot in the listed Companies and keep the regulatory Agencies posted on the these rules.
- To advise SECP for bringing appropriate change in the Coorporate laws and rulese for protecting the interest of Shareholders especially minority Shareholders and further advise them to hold Shareholders meeting only in Karachi where majoiryt of the Shareholders are living.
- To conduct Seminars, lectures and meetings for educating the Shareholders.
- To stop so called czars of Corporate section from loot, corruption and mismanagement.
The management of listed companies is required not to adopt coercive policies, arm twisting tactics and goondaism with the Shareholders, to respect and regard their views, to adopt the policies of good governance free of corruption and to increase the return paid to the Shareholders instead of increasing their own salary perks and benefits. It is afraid that if Shareholders above views are not respected they can also adopt such touch policies which God forbid shal convert Shareholders meeting into a battle field as has happened in the case of a listed Bank whose AGM was held on 28.3.2012
The world is hancing fast and Shareholders activism is growing with the result that prudent and wise management is respecting Shareholders views, objections and complaints. The Ex-Chief Exectuve of a drilling rig company of USA on Shareholders complaints of excessive payout gave up to $100 million on separation from the firm, he also gave up $ 7 million of deferred bonus.
In November 2011 USA Shareholders complained in a court of law charging the company’s directors with “gross breach of their fiduciary durties” in grnating” excessive and improper compensation” to executive including the
CEO TCL a children Investment Fund Management of UK is known for its Shareholders activism.
Regulatory Agencies especially SECP, Stock Exchange(s) and to some extent SBP should take cognizance of the problem of Shareholders especially minority Shareholders, protect their interest and discipline those companies who are violators of law. Corrupt and inefficient.