It's raining AGMs in September

Ashish Rukhaiyar
Mumbai, 7 September 2011

For an investor who holds shares in the top-listed companies, September is going to be a busy month. Especially if attending annual general meetings (AGMs) is high on the radar. There are some days when more than 10 companies have scheduled their AGMs.

According to a recent report by Ingovern Research Services, many large companies that feature among the top 500 listed entities have scheduled AGMs this month. This has made it difficult for investors to attend the meetings, increasing the likelihood of proxy voting, it says.

“Of the companies in the S&P CNX 500 index, 154 have their AGMs in September,” says the research entity that claims to be India’s first independent proxy analysis firm. The existing regulatory framework allows a listed company to hold its AGM within six months from the financial year-end.

Of these 154 companies, 18 are part of the benchmark S&P CNX Nifty of the National Stock Exchange (NSE). While another 13 belong to the Nifty Junior, 123 are part of the CNX 500 index. Interestingly, a majority of the meetings are to be held in the last week of September.

The list of these companies include Maruti, Wockhardt, IFCI, TVS Motor, BPCL, Grasim, REC, NHPC, NTPC, BHEL, Coal India, Educomp, Parsvnath Developers, Provogue, Jai Corp, Mastek, Suzlon and Gitanjali Gems, among others.

According to the research house, such bunching of AGMs "poses challenges" to investors who hold shares in many companies. There is not enough time to do proper due diligence and attending AGMs itself turns out to be an ardous task. The inability to attend AGMs leads to the “need for proxy voting services/solutions”, it says.

At least 10 companies have scheduled AGMs on each of four days of the current month (September 23, 24, 28, 30). On September 27 and September 29, as many as 14 companies would be doing so.

People tracking this development say such bunching also puts a question mark on the corporate governance norms in many of these companies. Representatives of investor associations allege such a situation helps the company make adjustments in the balance sheet to appease stock market players.

"If a company has nothing to hide, it can conduct its AGM earlierm too," says Hinesh Doshi , vice-president, Investors' Grievances Forum (IGF). “Such companies may also have corporate governance issues. There could be some adjustments in the cash flow or the profit as per bank loans or maybe something that could help push the stock price.”

According to Doshi, law makers could look at some of the global practices followed for giving time to companies for AGMs. In many countries, three to four months is the maximum time stipulated for a company to hold its AGM after the financial year comes to an end.