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COVID-19 impact: As AGMs go virtual, shareholders worry about management controls

Infosys and TCS to have their AGM June 27 and June 11 respectively, others like Wipro and HCL are expected to follow suit

May 30, 2020 / 04:29 PM IST
 
 
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Come fourth Saturday in June, huge auditorium in Christ University, Bengaluru will be abuzz. Not with students. But with close to 500 Infosys shareholders for the company’s annual general meeting (AGM).

However, 2020 will be different. For the first time, the company’s 39th AGM will go virtual thanks to COVID-19.

In a Bombay Stock Exchange filing, the company said, “This is to inform that the 39th Annual General Meeting (AGM) of the Company will be held over video conference on Saturday, June 27, 2020.”

Infosys is not the only firm to take the virtual route for AGM at the back of the virus outbreak. TCS too is taking its 25th AGM virtual on June 11 at 3.30 PM. Though Wipro and HCL Tech are yet to announce the dates, they too are likely to go virtual.

How AGMs are like every year

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Infosys’ conducts is AGMs in Christ University auditorium, whereas Wipro’s happens in its swanky Electronic City campus, Bengaluru. TCS' happens in Birla Matoshree auditorium, Mumbai and HCL Tech’s would be usually at the Indian Habitat Centre, New Delhi.

These AGMs are an elaborate affair, which a 60-year-old investor described as akin to a wedding. The sexagenarian was not too off the mark. After all formalities of chairman's speech comes the sumptuous banquet, the main attraction of the event.

For instance, if there are about 500 people, majority of them would come to enjoy the food and few of the serious investors remain in the auditorium for the question and answer session. “So this number would be hardly 100. With these gone, I wonder how many will actually turn up,” said an Infosys investor.

“Well, some of them would miss their favourite meal spread these companies layout and of course the gift hampers,” quipped the investors.

Concerns over going virtual

Are investors happy? The reactions could be at best described as mixed. While some of them said that virtual AGMs will facilitate people from across in India to participate, others are worried about lack of transparency.

One of them pointed out that they might not be able to question the management as much as they would in physical AGMs, as the medium gives the company more control.

In case of Infosys, investors would have questions about whistleblower complaints, that wiped off the market cap by Rs 50,000 crore. For Wipro, the concern would be on the new CEO, who will take charge on July 6.

Vinay CS, an investor and Bengaluru-based chartered accountant, said, “What we are concerned is if we will be allowed enough time to express our concerns. Because, virtual AGMs give the company more control.”

In addition, most of the investors that are regulars are the elderly and many of them technology-challenged. Venkat K*, 65, a Wipro investor in Bengaluru, said that he will have to ask his children to help him with the set up. “But I am not comfortable. So I am not sure if I will participate. For me nothing works better than a face-to-face meeting,” he said.

For those like Vinay, the question is also about how will it be organised. Since there is not much clarity at this point on the process.

Shriram Subramaniam, founder, Ingovern Research Services, a proxy advisory firm, said, “Two way communication could lead to chaos as anyone can ask questions.” In case of TCS, the company has allowed shareholders to send question 48 hours before the AGM and there is a limit of 1000 on first-cum-first-serve basis.

But there is a positive side too. Makarand Joshi, partner, MMJC and Associates LLP – a corporate compliance firm, said in a note that, “COVID-19 disruption is paving way for a larger digital push as shareholders from across will now be able to participate in such meetings.”

However like Venkat pointed out, most of them would still a physical AGM once normalcy returns.
Swathi Moorthy
first published: May 30, 2020 04:29 pm

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