The annual general meeting (“AGM”) is a cornerstone of shareholder engagement, and remains one of the most important touchpoints for shareholders in an issuer’s calendar. It is the principal forum through which shareholders receive updates on the issuer’s performance and strategies, ask questions of the issuer’s board of directors (“board”) and management, and vote on key matters.
The way an AGM is conducted also acts as an indicator of the issuer’s overall governance quality: How it prepares for the AGM, the completeness and timeliness of the materials and disclosures issued ahead of the AGM, and the readiness of the board and management to address shareholders’ concerns collectively reflect the issuer’s commitment to transparency and accountability.
Timelines under the listing rules
Shareholders rely on the suite of materials issued ahead of the AGM – the financial statements, annual report and sustainability report – to form a holistic and informed view of the issuer’s financial health, strategic direction, corporate governance practices and long-term prospects.
In recognition of their importance, the Listing Rules prescribe clear minimum timelines for the holding of the AGM and publication of these documents:
- AGM: within 4 months from the end of the financial year;
- full-year financial statements: within 60 days from the end of the financial year;
- annual report: at least 14 days before the date of its AGM; and
- sustainability report: typically at the same time as the issuance of the annual report.
These timelines ensure that shareholders receive timely access to relevant information needed to meaningfully participate in the AGM.
Inability to meet timelines raises governance concerns
Singapore Exchange Regulation (“SGX RegCo”) has observed an adverse trend of more issuers applying for extensions of time to hold their AGMs and to publish these documents. One commonly cited reason is the departure of the key person responsible for preparing the financial statements. SGX RegCo considers that it is a fundamental obligation of an issuer listed on SGX-ST to ensure that the function responsible for its reporting obligations is adequately staffed. Proper and complete records must be maintained, and there must be effective handover and knowledge-transfer arrangements in place.
Furthermore, there are basic expectations that issuers should fulfil to support their continuing compliance with the Listing Rules, including that the key personnel responsible for preparing, or overseeing the preparation of, the financial statements must be experienced, competent and appropriately qualified. In addition, issuers should proactively work with their external auditors to ensure that the audit of the financial statements is completed in good time, such as by providing the necessary information (for example, valuation reports) to the auditors in accordance with agreed timelines. A change of auditors should be planned well in advance, in time for the new auditors to take over and complete the audit within the applicable reporting timeline.
Issuers should not expect to receive accommodation to meet timeline requirements for operational lapses or resource gaps. SGX RegCo wishes to reiterate that it will not ordinarily grant extensions of time, particularly where the circumstances relate to matters within the issuer’s control and could reasonably have been mitigated.
Of even greater concern are cases where issuers submit repeated applications for extensions of time year after year, or across multiple reporting periods. Recurring extension requests raise concerns about the issuer’s underlying governance. Such patterns suggest deeper problems that require immediate remediation by the board on its oversight and the adequacy and the effectiveness of the issuer’s internal controls.
Consequences of non-compliance
Failure to comply with the requisite timelines in the Listing Rules constitutes a breach of the Listing Rules. SGX RegCo may ultilise the range of enforcements powers available to it to address such non-compliance. Where an issuer has persistently failed to convene its AGM in a timely manner, SGX RegCo may, in addition to requiring the issuer to regularise the conduct of its AGM, direct the issuer to hold an in-person information session. The information session serves as an interim measure to update shareholders on the issuer’s state of affairs and future plans, at the same time providing shareholders with the opportunity to raise concerns directly with the board.
SGX RegCo also highlights that failure to comply with its directives may result in the directors and executive officers being placed on the Directors’ and Executive Officers’ Watchlist (“Watchlist”) until the conduct of its AGMs has been regularised. Directors who vacate their positions without seeing through the issuer’s compliance with the Listing Rules and directives imposed by SGX RegCo would be considered as ‘jump ship’ directors, and may similarly be placed on the Watchlist. Such directors will remain on the Watchlist notwithstanding any subsequent rectification by the issuer.
Conclusion and expectations going forward
The rules are clear: AGM and reporting timelines must be met. Issuers should bear this in mind as we enter the AGM season.
Tan Boon Gin
CEO
SGX RegCo
Michael Tang
Head of Listing Compliance
SGX RegCo
