Should we attend AGM’s ?
Article published as on Wednesday, 11th
April, 2020 at 1:22 p.m.
AGM is one of the pious event defined under Indian companies’ act
which is equivalent to a festive occasion occurring every year.
This event may also be compared with a birthday of any individual,
AGM- can also be spelled as Annual Get together with Management.
This tradition has seen changes over the last 10 years. My father
used to tell me earlier there were gifts and snacks available at the AGM but
government has strictly banned this practice from 1st July 2015, as
shareholders often attended AGM for the benefits and not for the real business
purpose.
This was enforced to strengthen corporate governance. But
snack as refreshment are allowed before and or after the AGM's but no
other gift or food coupons are allowed.
 |
| Food Coupon |
(Some
companies still distribute them, so I do not fully understood logic of this
law.)
This has
enabled genuine investors a chance to attend the meeting and interact with the
management. Coming to the benefits you can get while attending AGM are as
follows
1) Find out
the quality of management-
Most
difficult and important thing about fundamental analysis is analysing
the quality of management.
One has
to observe the body language of managerial personnel’s. Their candour (quality
of being open and honest) or lack of it. Procedure of conducting AGM, presence
of all director and KMP in the AGM (shows sincerity towards their
responsibility)Also their ability to ANSWER TOUGH QUESTIONS, This is most
important and if they are not able to answer or just ignore tough questions it
shows their lack of transparency with the shareholders.
2) Meet
like-minded investors-
Due to timings of AGM working class is rarely seen at AGM's and you will mostly find senior citizens at AGM.
Due to timings of AGM working class is rarely seen at AGM's and you will mostly find senior citizens at AGM.
You get
to learn from the experienced ones. They can add a new dimension to you
analysis, help you understand new perspective, and you can understand why they
are invested in the same company as yours, also you can know their investment
strategies.
Network
with other shareholders, but you have to be selective and choose who ask
quality questions over shareholders those who just thank management for sending
annual report on time.
3) Gain information advantage-
During AGM one meets like-minded investors and more experienced ones. They can provide more insight-full details regarding company.
During AGM one meets like-minded investors and more experienced ones. They can provide more insight-full details regarding company.
Also, If
you have some sensitive questions it is advisable to meet management personally
after the meeting rather than raising questions publicly, this make it
comfortable to answer sensitive questions one-on-one.
4) Get refreshment-
Well this
is the least important, but just to inform you, at most AGM you will find
refreshment, so don’t bother packing a tiffin box with yourself.
These are
some of the advantages of attending AGM's.
While
some downsides of attending AGM’s is you have to dedicate time towards it, and
there are problems of reaching out to the venue in other states. For this the
companies can broadcast live proceedings of the AGM, very few companies are
doing it right now
Due to
global pandemic this year’s situation could be different.
Many
companies might think of conducting online AGM, or conducting through webinar.
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