AGM REFORM AND THE DEATH OF SHAREHOLDER DEMOCRACY
In the 1980s Bntain was exposed to Mrs Thatcher's new vision of democracy - a shareholder democracy where ordinary people could buy shares, attend AGMs, and have their say in the running of the omnipresent corporations. In the 1990s many concerned people have taken that vision and put it into practice. The results have perhaps not been quite what Thatcher intended.
A company's AGM is the one occasion of the year when the board of directors opens itself to public questioning. However, rumours are now circulating that certain large corporations, unused to the strength of feeling displayed at their AGMs, are now lobbying government to subvert our Maggie's noble dream. Allegedly, they want the laws changed to allow only those who can afford to invest considerable sums to attend. Paul Deluce investigated...
Speculation that the future of shareholder activism could be under threat, has been rampant this summer, following persistent reports that a number of companies are campaigning to prevent small investors from attending future AGMs. By a strange coincidence, the Department of Trade and Industry have been engaged in confidential talks with "a number of large companies" throughout the summer, debating the issues contained in a consultation document entitled, Company law reform - Shareholder communications at the annual general meeting. So, what's the story?
One company which has clearly tired of debating the issues with its more ethically concemed investors is the much loved and widely respected SHELL.
In an article published by the Financial Times in May, journalist William Lewis interviewed Ms Jyoti Munsiff, the company secretary of Shell Transport and Trading plc, the UK arm of the Royal Dutch Shell Group.
Ms Munsiff, according to the FT, wants to see the law changed so that individuals may only attend a company's AGM if they have been shareholders for a specified minimum period ea. 12 months. "I also believe that the investment should be of an amount which evidences serious interest in the company," she went us "Ms Munsiff is on holiday for two weeks". He added that the FTarticle was "wholly innacurate", and that Ms If you care, buy a s/'are, If no~, buy a lot FJumbe~ of s1~~~¢ own.& on, "something like £1000." Companies are currently able to alter their own rules, with the permission of the shareholders, to clamp down on activists at annual meetings, but Ms. Munsiff feels that "it needs to be treated as a wider issue of law. I am very much more in favour of the law being ammended in some way to eradicate what is a serious problem."
We phoned Shell in August, to find out more. We spoke to Mr Gordon West, the assistant company secretary, who told us Ms Munsiff is on holiday for two weeks. He added that the FT article was wholly innacurate, and that Ms Munsiff had been "mis-quoted". He denied that Shell was seeking to prevent single shareholders from attending the company's AGMs. How was Ms Munsiff "mis-quoted"? In what way was the FT article "wholly inaccurate"? Mr West was unable to comment. "You will have to speak to Ms Munsiff.'he said. We phoned again at the beginning of October. Several times. Ms Munsiffwas still unavailable. Eventually we received a call from Shell's press off~ce and told, "you cannot have an interview with the company secretary". Why? "Look, you are not in a position to demand an interview you don't have a story", responded the press of fice. We have also been denied an interview with Christopher Fay, the company chaimman, and with any other of the directors. Why? The DTI have been equally forthcoming. We also phoned them in August. "it would be inapropriate to discuss these issues at this time", a spokesperson said. "What companies have taken part in the consultation?" we asked. "That is confidential". "When will proposals be sent to ministers?". "We really couldn't say". Really?
We also contacted LLOYDS/TSB, MIDLAND/ HSBC, and COSTAIN, all of whom haveexperienced small investors making a fuss at their AGMs. All these companies stated that they have not taken part in the DTI consultation, that they are not campaigning to restrict single shareholders from attending the AGMs, and that all shareholders are enti- tled to ask questions at the AGM. Exactly what Shell's press office told us last week.
REFERENCES
'Shell seeks to curb AGM hijackers'. The Financial Times, p9, 8/5/96 Company
law reform - Shareholder communications at the ACM. A consultative document.
DTI, published April 96.