Mon, Jun 24, 2019 - Page 6 News List

EDITORIAL: AGMs show room for improvement

Listed companies’ annual general meetings (AGM) are an essential aspect of corporate governance and a way to evaluate the accountability of their directors.

A successful AGM should include not just a review of the firm’s financial performance, the approval of dividend payouts, a business outlook presentation and responses to shareholder concerns, but also the disclosure of remuneration and reward schemes for the directors, as well as the unveiling of the company’s long-term social, community and environmental commitments.

More than 520 Taiwanese companies held their AGMs last week, bringing the number over the past month to nearly 1,000.

Some AGMs have achieved the optimal benefit for all parties involved, with the companies highlighting operations and business plans, and shareholders appreciating the companies’ stocks and the extra income that dividends offer. For example, Taiwan Cement Corp briefed its shareholders on its plan to build waste gasifiers at its Ho-Ping Cement Plant in Hualien County to help deal with Hualien City’s garbage, after the plan was met with environmental protests over potential air pollution and garbage contamination.

In other AGMs, management raised awareness of key issues such as the business climate, the US-China trade dispute and repercussions of government policies, giving shareholders a picture of investment opportunities.

Several firms divulged their progress in moving production sites from China to Taiwan or elsewhere in Asia to avoid US tariffs, while others urged that the government handle returning firms effectively on behalf of the nation’s economy as a whole.

There have been fewer shareholders’ meetings descending into disarray, which happened often in the past few years, when so-called “unwelcome shareholders” tabled numerous motions to disrupt meetings.

However, tensions arose on Monday last week at home appliance maker Tatung Co’s AGM, triggering clashes between some shareholders and security personnel amid motions to remove three of the board’s independent directors.

At the end of the meeting, shareholders approved the company’s financial statement and a plan to write down last year’s losses, but the lack of corporate accountability, sound risk management, transparency and disclosure practices, which led to a string of scandals, corporate losses and the delisting of three Tatung subsidiaries in the past 12 months, are likely to continue to haunt the company under chairwoman Lin Kuo Wen-yen (林郭文艷).

Hon Hai Precision Industry Co’s AGM on Friday offered investors a clue about founder and chairman Terry Gou’s (郭台銘) successor at a time when its net profit has declined for two consecutive years and its largest client, Apple, has been hurt by the US-China trade dispute. The question is whether newly appointed chairman Young Liu (劉揚偉) and a nine-member operating committee will be able to lead Hon Hai to become a broadly based, cutting-edge tech company in the post-Gou era.

Another challenge facing Liu is whether to provide more transparent information about Hon Hai’s performance and practices, which could help enhance the company’s value.

Listed companies serve many consumers, employ many people and do business with a number of partners, and the role of their boards is to ensure that the firms thrive. Therefore, they have a duty to respect corporate governance and disclose as much information as possible. This year’s AGMs, as with those in the past, show there is still plenty of room for improvement in the mindset of Taiwanese corporate executives.

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