should you be attending AGM ?

Should we attend AGM’s ?

Article published as on Wednesday, 11^th 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.

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.

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.