Virtual AGMs: Reduce cost and headaches for corporates

Chennai: There are some positives emerging out of the Covid pandemic, as companies come to terms with virtual shareholder meets, which lowers costs by at least half if not more, besides saving time from some pesky shareholders. Government has allowed the conduct of annual shareholders meet virtually to prevent the spread of the coronavirus.

Private financier Manappuram Finance said its budget came down substantially by 90% of what they had spent last year. “We have saved over Rs 30 lakh this year, which includes Rs 14 lakh on printing and postage. We have also found an increased participation of shareholders from all over the country in its AGM through the virtual mode. In a physical AGM, most of them would miss the opportunity to participate,” its MD & CEO VP Nandakumar said. As per the directives of the MCA, companies have shared the annual report with shareholders in soft copy.

Due to virtualisation of the process of Annual Report distribution, companies were able to effect significant savings on account of printing and postage costs. Jindal Stainless Ltd (JSL) said it saved Rs 30 lakh in costs incurred towards printing and mailing of the Annual Reports this year. Its Company Secretary Navneet Raghuvanshi said “The advantages of conducting a virtual AGM saves significant time and resources and participation of shareholders is not limited to any geography, where all shareholders can join the meeting irrespective of their physical location.” The association for the microfinance sector, Microfinance Institutions Network (MFIN) saw its expense fall by 60% to Rs 10 lakh, as against Rs 25 lakh last year. “As we were to celebrate our 10th year anniversary this year, we could not miss issuing the annual report (book),” its chairman Manoj Kumar said. Book printing costs stood at about Rs 10 lakh for 500 copies at Rs 2,000 per book.

Further, no expenses were incurred on travel by the auditors and board of directors due to travel restrictions due to the lockdown. “Hospitality costs like airfare, hotel rooms rental was nil,” he added. City Union Bank has saved about 50% of the cost of conducting AGM. Its CEO & MD N Kamakodi said, “We have spent Rs 15 lakh this year on logistics and technology support and other expenses, compared to overall expense of Rs 30 lakh incurred in 2019. We sent soft copies of annual reports and saved Rs 10 lakh on book printing cost and Rs 5 lakh on hall and refreshment costs.” IOB MD & CEO Partha Pratim Sengupta agreed, “We have saved on huge expenses which is usually incurred on the cost of printing annual reports for shareholders.” However, the flip side to these tech driven virtual AGMs is that any technical glitch can hold-up the entire process.


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