Gift at AGM
CS A Rengarajan
Please refer Article under captioned subject Clamour for Gifts at
AGM of Companies – Needs to be prohibited by legislation Jan 2011
Chartered Secretary Journal
The publication of Article is timely
Amendment to Companies Act is welcome but it is not essential
This gift at AGM is only applicable to Listed entities.
Hence amendment to listing agreement is only required to take care of the same
We have already published details of gift at AGM in various forums
which is reproduced below.
Recent e-voting by Ministry of Corporate Affairs allows listed
corporate to option to go for e-voting. It will also helpful to curb
Gift at AGM
In addition to the above, members having one folio one share may not
be interested to have more folios and annual accounts not by email..
On account of this corporate will save money by way of postage and
Printing of Annual accounts
Will SEBI look into the same and incorporate the necessary provisions
in listing agreement.
Dear All
We have already written about gift at AGM six months before. The copy
of the same is appended below. The entire issue of giving gifts to
shareholders not to ask questions. Some shareholders are taking
advantage and just taking away 100 sweet boxes or 100 gifts while
attending the Annual General meeting. Their concentration is mainly
focused on gifts not to attend Annual general meeting. Recently one
AGM held in Chennai, the shareholders has got 50 folios, he took away
50 sweet box and 50 cup of coffee. He brought vessel from his house
to take away coffee.
Is it not discrimination among shareholders attending the meeting and
not attending the meetings?
Now MCA has asked views . They have already implemented voting
through video conferencing. More shareholders will participate from
all over india. It is just like webcast that everybody will
participate. There is no question of distribution of gifts arises
because they have got adequate no of shareholders participate through
video conferencing.
Conclusion: The Solution for this malady lies with MCA/SEBI The
regulatory authorities should not be watching this fun for ever.
Better late than never, MCA/SEBI should issue a circular IMMEDIATELY
prohibiting issue of Gifts of any kind Articles , Samples of the
products of the Company or ASSOCIATE Company Sweet packets or
Snacks . The Circular should state that only a cup of tea / coffee /
or soft drinks is only should be given and nothing more. In particular
shareholders while attending AGM will be given tea or coffee or soft
drinks not to carry the same to their houses also.
Best Regards
AGM of Listed entity – mockery by CS A Rengarajan
Introduction: As per Companies Act, 1956, it is necessary to obtain
shareholders consent for their books of accounts i.e. financial
transactions of all companies. This involves discussion among
shareholders before voting. The Adoption of Accounts prohibited under
postal ballot method. Conducting Annual General Meeting is routine
work every year. In closely held companies, they conduct the AGM
among the shareholders and all resolutions will be passed. Listed
companies are governed stock exchange listing agreement compliance and
general public are invested in the shares of the company. The Listed
companies are to disclose corporate governance requirement under
clause 49 of Listing Agreement. They are conducting Annual General
meeting by sending notice to their shareholders and to conduct the
proceedings.
One person one Folio: In Physical mode, One person has got multiple
folios through creation of ab, ac, ad, ae, etc and the concept of one
share one folio. Each folio got one share will be alloted and person
holding the same in the joint name as per above method.. They can
create large number of shareholders/members through physical mode.
Even in demat mode, single folio single share can be obtained. Many
listed companies, the single shareholding around minimum of 3000
shareholders. For example in Wipro current year annual report
specifically reports that 4130 shareholders are having single share.
Printing of Balance sheets A person can hold only one share and it
will give big problem to the company to send a copy of balance sheet
as well as postal charges. The corporate has to make uphill task to
over come this kind of shareholding patterns. For printing balance
sheets it costs around Rs.150/- whereas the holding of one share is
Rs.2/- ( the market value is higher in some cases)
AGM Preparation: The Secretary of the company make necessary
arrangement to smooth conduct of the meeting including sending notices
to the shareholders, to take necessary arrangement for venue .
During the Meeting: First start of the meeting, the chairman to be
invited to preside over the meeting. Once Chairman comes to dais, he
will see proper quorum was present. After that Secretary will read
Auditors Report and Before taking up accounts adoption, the questions
to be raised by the members. Then the resolutions will be taken up for
voting and shareholders vote for and against of the resolution. There
is no doubt all resolution will be passed and it is considered as
ritual rather than realistic one. The Minority shareholders are those
fragmented shares will not be in a position to prevail the company to
stop passing the resolutions.. But in recent days, minority prevails
over the majority shares and their activism has already started i.e.
institutional shareholders who are holding shares in concert.
Distribution of sweet boxesAfter the AGM, the distribution of sweet boxes begun.
There is no provision in the Companies Act, 1956 to prohibit the
companies to give gifts/sweet boxes to their shareholders. This has
done to please them and vote in favour of the company. However SEBI
has directed the listed entities not to entertain gifts to their
shareholders. In one company recently held AGM, there are only 200
shareholders are present whereas 9000 sweet boxes are distributed.
The person holding one share also entitled for sweet boxes. The cost
of one sweet box comes around Rs.70/- but he is holding share cost
is Rs.2/-
Discount coupons: Discount Coupon to buy their products e.g
RELIANCE sent along with Dividend Warrant or Copy of Annual
Accounts.Few companies are sending discount coupons. No Gift please
even distributing company products should be prohibited because
only share holders attend the meeting can avail it whereas the
discount coupon would reach all share holders wherever they reside.
In this case no discrimination among shareholders
Conclusion: The Solution for this malady lies with SEBI The
regulatory authority should not be watching this fun for ever.
Better late than never, SEBI should issue a circular IMMEDIATELY
prohibiting issue of Gifts of any kind Articles , Samples of the
products of the Company or ASSOCIATE Company Sweet packets or
Snacks . The Circular should state that only a cup of tea / coffee /
or soft drinks is only should be given and nothing more.
Will SEBI will take any steps in this regard
--
**
*PROUD TO BE MEMBER OF COMPANY SECRETARY BENEVOLENT FUND*
*- *
csarengarajan
Company Secretary, Chennai
email csarengarajan@ <csaren...@gmail.com>gmail.com
http://www.csarengarajan.blogspot.com
http://companysecretarytalent.blogspot.com/
http://companysecretarybenevolentfund.blogspot.com/
http://csvacancies.blogspot.com/
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CS A Rengarajan
Sorry for the typing error
regards
On 2/20/12, CS A Rengarajan <csaren...@gmail.com> wrote:
> Dear Friends
>
> Please refer Article under captioned subject Clamour for Gifts at
> AGM of Companies – Needs to be prohibited by legislation Jan 2012