SHAREHOLDERS' RIGHTS AND RESPONSIBILITIES IN GENERAL MEETINGS CONTENTS Introduction What is a Company? Division Of Corporate Powers Between Board And Shareholders The Role Of Investors In Promoting Corporate Governance
Shareholders' Rights Types Of Shareholders' Meetings What Constitutes a Valid Meeting? Rights And Responsibilities Of Shareholders In Relation To General Meetings
Shareholders' Rights To Vote At General Meetings Shareholders' Right To Inspect Register Of Directors' Shareholdings At AGM
ACKNOWLEDGEMENT SIDC wishes to thank Mr. Eric Kang Shew Meng of PFA Corporate Services Sdn. Bhd. for his permission in extracting most of the information in this booklet from his paper, "Shareholders' Rights and Responsibilities in General Meetings." He presented the paper on 29 April 2000 at the SIDC Saturday Seminar on "What Investors Should Know - Part 1" held at the Securities Commission, Kuala Lumpur.
INTRODUCTION When you buy shares (whether one lot or more), you become a shareholder of the company. What then are your rights and responsibilities? How do you relate to the management and board of directors (board) of the company? If you are unhappy with the way the company is being run, when and where can you voice your grievances or concerns? As owners of companies, shareholders should play an active role in exercising their rights. They can bring the company directors to task if they believe that the business is not being run in the best interest of the company. By participating actively, shareholders can encourage openness, integrity and above all, accountability of the board and in so doing, enhance the practice of good corporate governance. Another important role of shareholders is in deciding related-party transactions since the Kuala Lumpur Stock Exchange (KLSE) Listing Rules require that controlling shareholders abstain from voting in such transactions. It is the shareholders other than the controlling shareholders that will vote on such businesses. Shareholders must view Annual General Meetings (AGMs) seriously because they provide the opportunity for them to meet and question the board on a wide range of issues affecting the company. Shareholders, when attending an AGM can actively participate by: inquiring any matter pertaining to the company, which has been included in the annual reports raising issues relating to procedural and legal requirements of general meetings raising issues relating to the strategic and financial management of the company, the future direction of the company, its goals and objectives and its diversification and expansionary policy, if relevant engaging in frank discussions with the directors on the company's performance exerting pressure on the directors to be more transparent and accountable. At the meeting, shareholders should enquire whether notice of the meeting was given to the auditor and whether or not, the auditor or his authorised agent is present at the meeting. Shareholders can also inspect the Register of Directors' Shareholdings at the AGMs. Shareholders can exercise their rights to propose any resolution for consideration and discussion. They can also requisition any statement for circulation that they would like other members to be aware of when considering any proposed resolution. But care must be taken to ensure that no shareholder or group of shareholders dominate a meeting and prevent it from carrying out its business. As you can see, shareholders can contribute towards the corporate governance of the company if they exercise their rights appropriately. This booklet seeks to explain how the power of controlling the company is divided between the board of directors and the shareholders. It will explain your rights as a shareholder and the role you play in enhancing the corporate governance of the company.
But first, let us explain how the law views a company and how it divides the powers between the board and the shareholders. We will also give brief...
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