The annual general meeting in the corporate governance process of Maltese listed companies and its significance to shareholders

Abstract

This dissertation has the aim of evaluating the scope, functions and conduct of the local AGM of Maltese equity listed companies. The study consisted in evaluating the perspectives of both the shareholders of such companies and major institutional investors locally. The significance of the meeting to the shareholders, as perceived from their participation in governance related matters, was also examined. The AGM is the key mechanism whereby investors hold the Company's board of directors accountable for their actions. It is the only formal link between the shareholders and the directors. It is also the means for promoting transparency and accountability in the management of company affairs. The scope of the AGM is to give information on the company's operations for the :financial year under review which aim is being achieved. Shareholders are deemed to attend the AGM primarily for this reason. However, refreshments might also have an influence. Timing and location are factors to be taken into consideration when holding the meeting to encourage shareholders attending. The functions of the AGM are being fulfilled in getting shareholders' approval on the declaration of dividends, the annual accounts, the directors' and auditors' reports, the election of directors and the appointment of auditors. It is generally under the impression that these purposes of the AGM are met as they are of a statutory obligation. There was a unanimous agreement that it is neither the purpose nor the forum to uncover any wrongdoings during such a meeting as they should be reported immediately. Shareholders do not want to take responsibility of their investments. The reason is that the individual shareholders own a small stake of the firm whereas the institutional shareholders would have internal policies restricting them to vote. It is essential that the latter are a check and balance on directors through their influence in decision making. The shareholders lack knowledge of the markets and what these can offer them, hence investment education programs should be organised. Training to directors so that they can improve the recognition of their duties and responsibilities must be available. Finally the information released should be relevant, timely and understandable to the shareholder to assist in investment decisions.