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Dispute resolution – boardroom or courtroom

A board is entrusted with the role of ensuring that a company’s business and affairs are managed under its direction and oversight. It is responsible for periodically reviewing and approving the company’s overall strategies and significant policies. At the same time, board members should discharge their powers in a fiduciary capacity and act in the best interest of the company and its shareholders.

However, there are times when dissenting views are overruled by dominant directors/controlling shareholders to the detriment of minority shareholders’ interest.

Shutting down debate in the boardroom does not resolve conflicts. Instead, the conflicts seep through the cracks, destroying relationships from within. Then, the differences in opinion and disagreements escalate into tussles between the boards and shareholder-directors. With rival camps of directors (and sometimes shareholders) jostling for control of the company, drastic actions like removal of directors, filing of legal suits and suspension of directors take place.

The month of April marks the beginning of the bustling annual general meetings (AGM) season. As usual, MSWG encourages shareholders to attend AGMs and actively participate in the Question & Answer (Q&A) sessions - ask questions, and closely dissect responses made by the Board and senior management for making informed decisions about their investments.

As for PLCs, we believe they could incorporate some practices to better conduct their AGMs this year.

When it comes to investing, it is easy to buy into the idea of holding onto your stocks for long term, as advised by some stock market gurus. But you should not take a passive approach in investing. You should spend time keeping up with stock prices, news on the companies you have invested in, and even what analysts are saying about some of the stocks you own.

The better advice is to invest for the long term but to monitor and stay alert for changes that may impact the companies you invest in.