Shareholders want regulators to review proxy AGM arrangement

• Insist current practice contradicts CAMA rule on exercise

Shareholders under the aegis of New Dimension Shareholders Association have called for an urgent review of proxy AGM arrangement, insisting the current practice contradicts the Companies and Allied Matters Act (CAMA) laid down a rule for such exercise.

Shareholders not attending a company’s annual general meeting (AGM) may exercise their voting rights by proxy, or they may vote by mail as stipulated in the Companies and Allied Matters Act (CAMA).

Also, the recent guidelines released by the Corporate Affairs Commission (CAC) on proxy AGM stipulated that any investor who is not willing to attend the meeting could appoint a representative.

But the president of the shareholders’ group, Patrick Ajudua insisted that what is obtainable as proxy AGM at the on-going yearly meetings of listed firms contradicts the stipulated guidelines and does not address investors concern.

For instance, he noted that the current proxy practice is a disenfranchisement to shareholders’ rights because investors who have indicated interest to attend the meeting are now compelled to subscribe to proxy arrangement.

He described the act as an infringement on shareholders’ fundamental right, noting that it is against the principles of corporate governance.

“This is against section 227 (1) of CAMA which guarantee shareholders right to attend AGM without been compelled to subscribe to the proxy arrangement. This infringes on shareholders’ fundamental right.

” I have no issue with Section 230 of CAMA which approves the use of a proxy for members unable to attend meetings. But the issue is that it is not the intention of the section to compel members who have indicated interest to be physically present to subscribe to the proxy arrangement.

He continued: “This to me is unethical and against the principle of corporate governance as regards the attendance at AGM”.

Furthermore, Ajudua also pointed out that shareholders are not allowed to discuss the affairs of these companies with the directors at a meeting in the current arrangement.

“Section 211 of CAMA confers on the shareholders present at the meeting the liberty to discuss any matter relating to the companies as presented in the circulated annual report.

“The proxy AGM through the proxy forms does not solve these issues. Though the company may request that you to forward your comments in writing, such is not given the appreciable response at the end of the day.

“The proxy AGM does not address the issue of election into companies’ audit committee where you have validly nominated contestant above the required number of three on the part of shareholders representative as containing in Sec 359 (4, 5) of CAMA.

“If it happens this way, it will infringe on the right of validly nominated shareholders to contest such a position.

He, therefore, urged the SEC, NSE, CAC and other regulatory bodies to ensure that the concerns of the investors are considered in accordance with the rules of the exercise as stipulated in the CAMA.

For companies that are not able to pay dividend due to macro economic challenges, he suggested that such companies should write to the court seeking approval to modify the process of holding there meeting in accordance to Section 223 of CAMA.