The significance of the AGM in Improving corporate governance of Maltese listed companies

Abstract

Purpose: Design: The objectives of the study were attained by means of semi-­‐ structured interviews with seventeen listed companies and five stock brokers, complemented by fifty-­‐four questionnaires to shareholders and the researcher’s observation of two AGMs. Findings: This study indicated that AGM proceedings could be carried out more effectively by being less stage-­‐managed and more interactive and engaging. It showed lack of shareholder activism in Malta, denoting a low sense of ownership by Maltese investors. The apathy of shareholders, poor attendance and participation at the AGM was mainly attributed to investors’ poor financial knowledge. Findings revealed that the majority of listed companies comply with the Code at the AGM. However, doubts lingered as to whether company announcements truly reflected all unfavourable events which were of interest to shareholders. This study highlighted the salient needs for greater transparency and accountability being reflected at the AGM and in its communication with shareholders. Conclusion: This study concludes that the holding of the AGM is perceived to be an important element of corporate governance practices in Maltese listed companies. However, there is still room for improving AGM proceedings and the mechanisms of corporate governance. Enhancement requires proper education, commitment, shareholder participation and guidance by appropriate laws and regulations. Value: It is expected that this study will assist new MSE listed companies in convening an AGM and also to assist existing Maltese listed companies in improving the conduct of the AGM and corporate governance. This study sheds light on the current AGM proceedings of MSE listed companies and identifies weaknesses and areas of improvement as the way forward to continue improving corporate governance practices.