Sun, Apr 05, 2009 - Page 8 News List

EDITORIAL: The shutting out of shareholders

Every year, US billionaire Warren Buffett’s Berkshire Hathaway Inc attracts tens of thousands of people to its AGM in Omaha, Nebraska, where Buffett and his business partner Charlie Munger spend hours answering shareholder questions on the company’s performance and outlook.

This year, the AGM is scheduled for May 2 and the company has arranged for journalists from Fortune magazine, CNBC and the New York Times to ask Buffett and Munger questions submitted by shareholders.

The Sage of Omaha is not afraid of answering questions that may grill Berkshire and its operations at this difficult time. As he said in a letter to shareholders on Feb. 27: “We know the journalists will pick some tough ones and that’s the way we like it.”

For some, shareholder meetings are less than compelling affairs, but Buffett likes to encourage Berkshire’s shareholders to attend, and the company always tries to make the meeting festive and informative.

In Taiwan, the situation is rather different. Most listed companies tend to prefer that shareholders stay well away. Companies claim that their management and board directors are doing everything possible for investors, but in the end rubber-stamping executive decisions is the preferred AGM agenda.

In recent years the situation has grown worse as listed companies find ways to actively discourage shareholders from attending and exercising their rights. This year, an astonishing number of firms have scheduled their AGMs on the same dates to frustrate investors with broad portfolios.

Despite growing criticism that such practices breach shareholder rights and interests as well as infringe on corporate governance principles, 289 listed companies will hold meetings on June 10, 241 firms on June 16 and 258 on June 19, according to latest stock exchange information. Last year, the lucky day was June 13, when more than 600 listed companies held AGMs.

Some companies have said that this scheduling was based on zodiac considerations, but the unspoken reason for all of this is that it obstructs “unwelcome shareholders” who might make embarrassing statements or throw difficult questions at executives.

There is no justification for denying a shareholder’s right to know what is happening with his or her investment, nor is there any excuse for frustrating the right to comment on company performance and have a say on who sits on the board.

If the government wants to deliver on its promise to enhance transparency in corporate governance, then it should encourage shareholder participation in company affairs. It should not sit on the sidelines and protest that there are no regulations on such matters.

The Financial Supervisory Commission’s decision on Friday to seek an amendment to Article 36 of the Securities and Exchange Act (證券交易法) that would afford companies more time in scheduling annual shareholder meetings is just a start. The next step should see the regulator devising incentives for listed companies that display transparency.

The regulator should also design a system that allows shareholders to participate in meetings if they cannot attend in person because of block scheduling such as that described above.

After all, it is the shareholders, not the management or directors, who own the company.

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