The Securities Commission (SC) might incur the ire of at least some shareholders of Supermax Corp Bhd loyal to executive chairman and group managing director Datuk Seri Stanley Thai, if it rules that all companies have to have an independent non-executive chairman. At its recent annual general meeting, one Supermax shareholder stood up and defended Thai after a representative from an institutional fund asked that Thai relinquish the role of chairman as he is playing the CEO role.
He isn’t alone. Investors who choose to put their money with Genting Bhd, for instance, are only too aware of the company’s slant on related party transactions. But be it Genting’s executive chairman Tan Sri Lim Kok Thay or Singapore-listed United Overseas Bank Ltd’s main shareholder-chairman Wee Cho Yaw and his son, Wee Ee Cheong, who is deputy chairman and CEO, investors are essentially still invested because their money is arguably as much on the personality driving the group as on underlying fundamentals.
To be sure, however big a fan one may be of a leader, every shareholder wants proper checks and risk management measures to be in place. As such, they stand to benefit from the SC’s move for higher standards of disclosure and corporate governance.
On Tuesday, the SC published a consultation paper seeking public feedback on independent chairman and shareholder poll voting.
But if the SC’s goal is to ensure boards can be independent of management to strike that right balance between ownership and control, what is needed is perhaps not so much an arbitrary separation of the chairman and CEO role or even mandating the SC’s ideal independent chairman.
If anything, the SC may have a better chance of getting that board independence by mandating that independent directors fill more than half the board seats. For the easy reference of investors, the SC could even publish a list of companies that fall short of its standards.
That said, minority shareholders really only need one competent and diligent board member to blow the whistle, whether or not he or she is outnumbered in a boardroom.
In the same vein, mandating poll voting might not be the answer to eliminate the tendency of some companies to quickly dispose of resolutions at shareholders’ meetings by ensuring they have enough bodies raising their hands.
Instead, the SC may want to consider making it compulsory for companies to disclose the number of shareholders who turn up at meetings and the shareholding they represent. Companies should also be compelled to disclose if there were any opposition to a particular resolution, regardless of whether the resolution is passed.
Wouldn’t a red flag be raised if the attendance data show, say, resolutions were passed by a show of hands by five out of 10 people present at the meeting?
Data showing how long an AGM or EGM lasted should also indicate whether directors allowed ample time for question and answers.
All that should not be hard to implement as these data are taken down by company secretaries anyway, and need to be signed off by professional auditors. Just provide companies with a template to fill to make things easier.
After all, the migration to a self-disclosure regime is to speed up processes while encouraging companies to make better disclosures, not free them to say less.
Whatever the outcome of the SC’s request for public feedback on independent chairman and voting by poll, shareholders would do well to remember they too should play their part in ensuring their best interests are protected.
This article appeared in The Edge Financial Daily, November 18, 2011.
He isn’t alone. Investors who choose to put their money with Genting Bhd, for instance, are only too aware of the company’s slant on related party transactions. But be it Genting’s executive chairman Tan Sri Lim Kok Thay or Singapore-listed United Overseas Bank Ltd’s main shareholder-chairman Wee Cho Yaw and his son, Wee Ee Cheong, who is deputy chairman and CEO, investors are essentially still invested because their money is arguably as much on the personality driving the group as on underlying fundamentals.
To be sure, however big a fan one may be of a leader, every shareholder wants proper checks and risk management measures to be in place. As such, they stand to benefit from the SC’s move for higher standards of disclosure and corporate governance.
On Tuesday, the SC published a consultation paper seeking public feedback on independent chairman and shareholder poll voting.
But if the SC’s goal is to ensure boards can be independent of management to strike that right balance between ownership and control, what is needed is perhaps not so much an arbitrary separation of the chairman and CEO role or even mandating the SC’s ideal independent chairman.
If anything, the SC may have a better chance of getting that board independence by mandating that independent directors fill more than half the board seats. For the easy reference of investors, the SC could even publish a list of companies that fall short of its standards.
That said, minority shareholders really only need one competent and diligent board member to blow the whistle, whether or not he or she is outnumbered in a boardroom.
In the same vein, mandating poll voting might not be the answer to eliminate the tendency of some companies to quickly dispose of resolutions at shareholders’ meetings by ensuring they have enough bodies raising their hands.
Instead, the SC may want to consider making it compulsory for companies to disclose the number of shareholders who turn up at meetings and the shareholding they represent. Companies should also be compelled to disclose if there were any opposition to a particular resolution, regardless of whether the resolution is passed.
Wouldn’t a red flag be raised if the attendance data show, say, resolutions were passed by a show of hands by five out of 10 people present at the meeting?
Data showing how long an AGM or EGM lasted should also indicate whether directors allowed ample time for question and answers.
All that should not be hard to implement as these data are taken down by company secretaries anyway, and need to be signed off by professional auditors. Just provide companies with a template to fill to make things easier.
After all, the migration to a self-disclosure regime is to speed up processes while encouraging companies to make better disclosures, not free them to say less.
Whatever the outcome of the SC’s request for public feedback on independent chairman and voting by poll, shareholders would do well to remember they too should play their part in ensuring their best interests are protected.
This article appeared in The Edge Financial Daily, November 18, 2011.
