We have just ushered in a brand new year and, in doing so, we have taken the opportunity to review and look back on the corporate highs and lows for us in 2011.

 

Clearly, we have had our fair share of unhappy shareholders within corporate Malaysia despite the move by the regulators to try and increase transparency standards. From a few annual general meetings (AGMs) and other such gatherings we attended, a perennial and prominent issue is still down to the basic need of finding the best people for the job.

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At one recent AGM, its chairperson was managing proceedings so poorly that a shareholder managed to wrest the microphone forcefully from him and announced that everyone there should vote on a particular proposal. We were completely taken aback.

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Thing is, this proposal was nowhere on the day's agenda. What the shareholder really wanted to do was to change the number of appointed directors for the company. The aggrieved shareholder felt that there should be fewer Non-independent Non-executive directors (NINE). Now, changing the number of directors is no small matter because it means changing the memorandum and articles of a company, and cannot be included under “any other business”.

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To compound the matter, the inept chairperson was not sure if he should carry through the shareholder's proposal and turned to the company secretary for advice. The company secretary then stood up and meekly said that, given such an important proposal, the shareholder should have submitted for tabling at least 21 days before the AGM, as it needed to be on the agenda for all shareholders to consider. His point, however, fell on deaf ears as the emboldened shareholder insisted that he need not have done so, and only those shareholders present at the AGM need to vote on his proposal.

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This resulted in confusion and heightened tension, and the shareholder still ignored everyone else's pleas to make way for others to speak. The AGM turned into a drama of something like the Bold and the beautiful.

Quite a few other shareholders were not sure of what the rules were and demanded a vote, but others familiar with the rules in the Companies Act under Section 155 confirmed that the shareholder who had the microphone had to comply with due process first if he wanted shareholders to consider and vote on his proposal.

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The company secretary just sat dumbfounded and watched all this unfold, while the helpless chairperson was left to his own devices, and was unable to specify how the meeting should proceed or even how to propose an extraordinary general meeting (EGM). The chairperson's and company secretary's seeming indifference incensed the shareholders even more, leading them to accuse the board of scare-mongering to prevent the microphone happy shareholder's proposal from being passed. Matters got so unwieldy that management and some shareholders almost came to blows and even started pushing the venues' chairs at each other; and all over not knowing what the right answer was to the situation.

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Things should not, and would not, have resulted in such an unprofessional and unruly situation if the chairperson had been properly prepared for the AGM, had better control of the meeting procedures, as well as, had the rules for such meetings at his fingertips. The company secretary could have ensured better control by the chairperson of the AGM's proceedings if they had prepared accurate statements on rules and procedures for the chairperson to read out at the AGM, and this would have most certainly cleared any doubts on the procedures of the meeting.

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As corporations everywhere progress towards becoming more accountable and transparent in their dealings, it is very crucial that a company secretary understand his role well and provide his expert knowledge for AGMs and other corporate meetings to proceed smoothly towards successful resolutions. If a company secretary should fail in this most basic of responsibilities, then the board of directors will have to brace themselves for potential AGM upheavals and potential brawls, time after time.

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Clearly, the company secretary in this case may have had the required knowledge but was not prepared for shareholders to become so aggressive, and was unable to provide the necessary information quickly or confidently. As management legends often reiterate, “surrounding oneself with the right people is crucial to one's success.” That is something the poor chairperson and members of the board would do well to remember from now on to prepare themselves for what could happen at an AGM.