Stock market operators have expressed mixed reactions to plans by the Securities and Exchange Commission (SEC) to regulate conduct of Annual General Meetings (AGMs) and pre-AGMs.
The new sub-rule seeks to reduce the cost of organising shareholder meetings, by eliminating distribution of gifts to shareholders, observers and any other persons at annual and extraordinary general meetings.
Mr Moses Igbrude, Publicity Secretary, Independent Shareholders Association of Nigeria, said that the reasons given by SEC for the rule were not strong.
Igbrude said that money spent on corporate gifts to shareholders could not be compared with amount spent on corporate social responsibilities, penalties and taxes, among others, by quoted companies.
He said that none of the shareholder groups had compelled any company to give corporate gifts or to hold pre-AGM meetings.
According to him, food and water given to shareholders at meetings cannot be quantified as corporate gifts.
“Yes, there are issues in crowd management and distribution of gifts or food to shareholders at AGMs, that doesn’t mean SEC have to criminalise giving of gifts or pre-AGMs.
“SEC should find better ways of addressing the issues rather than to punish shareholders and their companies,” he said.
Mr Boniface Okezie, National Coordinator, Progressive Shareholders Association of Nigeria, said that the commission should not regulate conduct of meetings but could assist the companies where things could get out of hands.
Okezie said that the law permitted that the commission should attend AGMS as observers on invitation by quoted companies.
He said that SEC could not stop companies from conducting pre-AGMs organised for shareholders by the owners of the business so long they did not compromise.
Okezie said that the fora afforded shareholders opportunities to evaluate companies’ performances and activities in the past year.
On the ban on AGM gifts, the shareholder activist said that sharing of gifts at AGMs had created a lot of problems to many companies.
Okezie noted that some shareholders failed to conduct themselves in an orderly manner.
He, however, said that there was no need for fining companies for sharing gifts at AGMS, urging that SEC should be more concerned with critical issues in the market such unclaimed dividends and inability of companies to post annual reports to shareholders within 21 days.
“It does not call for fine of any sorts; unclaimed dividends are still there for the regulatory body to tackle as well as posting of annual reports to shareholders within 21 days, which many companies have failed to comply with,” Okezie said.
He said that sharing of companies’ products at separate meetings with shareholders should not be discouraged as long as there would be decorum.
Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd., however, described the SEC move as good, saying that it would help companies to conserve funds to boost their operations.
“Entertainment at the meetings is good, but should not go as far as buying corporate gifts or giving cash to few shareholders to influence their comments at AGMs, leading to praise-singing even where the company dividend payout is low compared to share price,” Omordion said.
He said that some shareholders failed to set agenda to directors and management of their companies due to unnecessary gifts.
“Many companies have continued to post losses and investors are deprived of dividends,” Omordion stated.
He said that SEC should educate shareholders to know their rights and how to defend them to protect their investments.
SEC proposed a N10 million fine against any company which will flout the rule.