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+--- Thread: Are minority shareholders worth fighing for (/thread-are-minority-shareholders-worth-fighing-for)
Are minority shareholders worth fighing for - irfanahmedmeer - 09-02-2003
Everywhere I go I hear that both regulatory authorities and the auditors must protect the rights of minorty shareholders. I agree with this. It is said that proper dislosures should be given in financial statements so that Minority shareholders are better able to make thier decisions.
Well a few months ago I attended AGM of a reputed and large company engaged in suger bussiness, there I met worthy minority shareholders (atleast a part of them). They fought over getting copies of the financial statements, I thought look everybody is right they are intreseted in what disclosures are in accounts, but later on I discovered that some of them were itreseted in black marketing these financials when these will not be available from KSE liabrary.
Then they started questioning the Management, guess abt what?
1. Profitablity of the company
2. Finanical position
3. Performance of management
4. Nonoe of the above.
The corect answer is none of the above (4) they demanded that
1. Factory visit should be arranged by the company (shareholders + thier families)
2. Double suger quantity should be given as gift to them
Considering above do you think they are worth figting for
- Pervez - 09-03-2003
Hi Meer!
As u must be aware that shareholders can be divided into two main types i.e. individual and institutional investors. As far as individual minority shareholders are concerned they need to be educated about investment business. In our country, we don't have a culture where educated people get involved in this matter. Doctors, engineers, professors, etc. think that broker(Dalal) does not belong to their social status. I know my own case, although i was in accounting field, i never thought of buying shares in Pakistan. So more educated people need to be involved.
Also market structures need to be improved. For example, in USA, at a web side called "Edgar" you can get Annual Report of any listed co. You can either download it or u can ask to deliver the actual report free of charge and free of postage. I have received many reports (some of them quite thick) without paying a cent!!
Also u can get quarterly reports, special event reports, from US SEC
site.
As far as institutional investors (mutual funds, DFIs, Banks etc.) are concerned, they should be able to play a more effective role as miniority stake holders. But i think most of them like to confine themselves to a few safe issues.
So i can conclude that we should fight for minority shareholders as a matter of principle irrespective of how some of them behave. We should remember that as auditors we are hired by all investors not just the majority shareholders.
Thank you
- irfanahmedmeer - 09-03-2003
Hi Pervaiz
I agreed in principal that auditors should continue fighting for the minority shareholders. However it can not be ignored that the minority shareholders should be more informed themselves.
Further, auditors are ususally appointed by the major shareholder in the case of Pakistan
- irfanahmedmeer - 09-03-2003
Further, I was not talking about some of the shareholders in that AGM I am talking about 80% of them
- Pervez - 09-03-2003
Hi Meer!
Auditors all over the world are appointed by the corporation which is a seperate legal entity. In practice, the appointment is done in general meeting. We have to remember that directors and officers of the company act on behalf of corporation. Corporation has seperate existence from any of them. Of course the practical matters are decided by board of directors where majority shareholders have control. But they are supposed to act in the interest of all shareholders not just majority shareholders.
Thank you
- smraza - 09-10-2003
<img src=icon_smile.gif border=0 align=middle>
Agreed Pervez, but benefits of the auditors are attached with the majority shareholders, if they are going fight for minority (as Meer said they dont worth for fighting) then their is a fair chance to loose the client,
this frustration can be seen in auditors, and u will find saying the auditors, " Hell, these are the shareholders we were fighting for with the management??" <img src=icon_smile.gif border=0 align=middle>, other countries may have civilized shareholders, but unfortunately the scene which Meer told us, can be seen in AGMs of almost all of the companies.
S M R