The SharePHIL annual shareholders’ meeting observation study

In pursuit of SharePHIL’s mission to promote domestic capital market development through advocacy, education, and enlightenment of shareholders, the organization created the Shareholder Relations and Representation Committee (SRRC).

One of the activities of SharePHIL, through the SRRC, is to attend the Annual Shareholders’ Meeting (ASM) of some publicly listed companies and to observe how their ASM’s are conducted. SharePHIL has invested in shares of stock of listed companies, and as a bonafide investor, is able to attend their ASM’s. As a shareholder, SharePHIL receives from the investee companies the materials that are sent to shareholders, such as the notice of meetings, meeting agenda, proxy forms, audited financial statements, ballots, and the definitive information statement. The materials are sent by the companies to all shareholders prior to the date of the meeting, enabling shareholders to read and study the materials before the ASM. The materials provide shareholders with knowledge about the business and financial status of the company. They help shareholders better understand the context of the reports by the board and management presented during the ASM, so that they meaningfully participate in the meeting by asking relevant questions, or offering constructive suggestions.

SharePHIL sends volunteer members from the association to attend the ASM’s of the companies in which SharePHIL owns shares of stock. The volunteers are given a questionnaire to fill out after they attend the meeting. Some of the questions included in the questionnaire are:

•     Was the registration process orderly?

•    What documents did you receive during the registration process?

•    Was the ratification of the acts of the board and management for the preceding year included in the agenda? If so, were the major acts presented and discussed before approving them?

•    Was there an investor relations desk or its equivalent?

•    Did the presiding officer provide adequate opportunity for shareholders to ask relevant questions?

•    Were questions asked relating to subjects such as business risks, business plans, share price movements, dividends, competition/market share?

•     Did the audit committee endorse the appointment of the external auditor?

•    Did the nominating committee present the list of nominees for directors of the Board for the incoming year?

•     Were candidates for independent directors identified during the meeting?

•   Were you able to make a decision at the end of the meeting whether to buy, sell, or hold your shares?

•   Did the directors/officers circulate and interact with the shareholders before or after the ASM?

•    Is the venue of the meeting accessible and convenient to shareholders?

The SharePHIL volunteers actively participate in the question and answer session during the ASM. The volunteers identify themselves as representing SharePHIL and they give a brief description of what SharePHIL is all about. It is emphasized that SharePHIL’s objective is education and enlightenment of shareholders.

The responses to the questionnaire are collated by the research committee of the SharePHIL. After the collation process, a report on the findings of the observation study is prepared. The report does not specify the names of the companies included in the study so that improvements can be made across the industry without pointing any fingers. Only the total number of companies observed are included in the report and the summarized results. The report, together with some recommendations for the improvement in the manner the ASM’s are held, is submitted to the Securities and Exchange Commission, the Philippine Stock Exchange and to the companies whose ASM’s were observed by SharePHIL.

The observation study has been going on for about five years. SharePHIL has observed that there has been a steady improvement in the manner in which ASM’s are conducted. There are now more companies which provide an investor relations desk, or its equivalent at the registration area. More companies are now posting the list of major acts of the board and management at the registration area or distributing them to shareholders as they register. There is also an increase in the number of companies that provide real-time online-voting facility for the election of the board of directors. The board of directors and officers have also been observed to interact and circulate more among the shareholders before and after the meeting.

SharePHIL is looking forward to continuing the observation study. It will expand its coverage to a few more companies that it has made investments in. SharePHIL is also exploring ways to improve the content and coverage of the observation study to be more relevant to the shareholders, particularly the minority shareholders.

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Alfredo B. Parungao is the newly elected president of the Shareholders’ Association of the Philippines. He spearheaded the project to conduct observations of annual stockholders’ meetings to encourage the intelligent participation of shareholders at ASMs. Mr. Parungao is president of Ligaya Management Corp., chairman of Philtown Properties and CIBI Foundation, and is an independent director at Swift Foods Inc., Insular Investment & Trust Corp., and U-BIX Corp.

To learn more about the SharePHIL ASM Observation Study, visit https://sharephil.org/resources/. Join SharePHIL today! Scan the QR Code below or go to: http://bit.ly/SharePhilMembershipApp

The views and opinions expressed in this column are those of the author/s and do not necessarily reflect the official policy or position of SharePHIL nor purport to reflect the opinions or views of SharePHIL or its members.