For millions of shareholders, the jamboree of AGMs has become a farce.

Frivolous questions are asked and frivolous answers are provided by the management. In most cases, inconvenient questions are avoided and the real issues affecting the company and the shareholder are being shunned. In fact, to avoid shareholders, corporations are even shifting their registered office from large cities like Delhi or Mumbai to an obscure places deep in the country side.

Go to Birla Hall or Patkar Hall, the usual venues of AGMs in downtown Mumbai, one can find shareholders spending most of the time near tea and snack counters. Says well-known corporate lawyer Girish Dave: ``The Indian shareholder is still looking at the free cup of tea andsnacks. Most of the busy shareholders avoid the AGMs, therefore we have a group of unemployed and retired people who have plenty of time to waste attending the AGMs. How do you expect the quality of AGMs to improve?''

A routine AGM begins with a wooden-faced employee reading out the auditor's report, which is followed by the company's chairman announcing the first quarter results and the outlook for the rest of the financial year.

Subsequently, shareholders ask questions based on balance sheets or other reports. By the time voting on the resolutions takes place, a bored audience already walks out of the venue. And the company management will have its way in getting things done.

Unlike in the US and Japan, where militant shareholders ask a range of inconvenient questions ranging from pollution to bio-technology, this tribe is in minority in India. ``While in Japan, well-known corporates are hiring goons to prevent shareholders from attending the meetings. In India, as the awareness among shareholders isalmost zero, it is easy for a company to finish off the AGM exercise,'' Dave said. On the contrary, shareholders spend most of the time complimenting the management and especially the chairman. ``This kind of futile monologue should be banned. Though the Chairman of the meeting sets a time limit, most of the shareholders find three minutes are too less to applaud the company.''

Says P M Asher, a veteran shareholder of Indian Hotels: ``I have been attending the company's AGM for the last 30 years. Shareholders are not aware of their rights and duties. It is only when market capitalisation of any company goes down, they start shouting.'' Citing an example, he says Indian Hotels lost 65 per cent of its market capitalisation in the last 12 months alone. The scrip has fallen from Rs 657 in September 1997 to below Rs 300 in August 1998. ``Unless shareholders demand action from the management, the latter would continue to take them for granted,'' he said.

Some Indian companies like Raymond, Essar Steel, EssarOil and Jindal Vijayanagar Steel hit upon a novel idea to avoid those shareholders who do demand action militant or otherwise. As soon as the company realises that it has gone haywire, they shift their registered offices to their plant site or to some obscure place where no shareholder can ever reach.

Essar Oil which came out with one of India's biggest public issue conducts its AGM in its plant site which is 30 kilometers away from civilisation in Jamnagar, Gujarat. An AGM is, therefore, conducted in a conducive and controlled environment. ``The idea is to avoid uncomfortable questions in front of the media, analysts or financial institutions,'' says an Essar executive. Similarly, when the Jindals wanted to shift their offices from Bangalore to its site in Vijayanagar, shareholders protested and defeated the motion. The Jindals had earlier shifted their registered site from Mumbai, where the bulk of Indian shareholders reside.

One of the weaknesses exploited by the promoters is that the shareholders ofany company are not united. There are no shareholder association or forum where they can air their problems. ``The shareholders of the country must unite and the management should support this kind of initiatives,'' said another shareholder. Another reason why AGMs have become unattractive is due to a common year ending. As per law, a company should finish its AGM process within six months of the fiscal-end. Therefore, more than 80 per cent of the 10,000 listed companies have to finish their AGMs by September. As many companies schedule their AGMs on the same day, shareholders are unable to assess the results properly. Besides, in order to get the dividend cheque fast, the investors try to finish off the AGM process as soon as possible.

``Before the common year-end, most of the AGMs were scheduled through out the year. But a common year-end has failed to help the investing community,'' says Bharat Shah of Bombay Stock Exchange. Shareholders say that as they are the minority in number, financial institutionsshould help in leading the small investors. ``Most of the companies are owned by the financial institutions. FIs should stop playing a passive role and ask questions to the management in front of the small investors,'' Dave said.

Till date, Indian FIs have failed to play their role properly. Whether it was ITC, Shaw Wallace or Dunlop, the FIs never came forward to make the small investors understand their point of view. ``FIs only believe in neutral role as if they are not at all affected by the events in the company. In the last one year alone, the market capitalisation of the shares held by the FIs have come down by almost 35 to 40 per cent. It is high time that FIs should come forward and start asking questions,'' said NSE broker K Kumar.

In order to make AGMs more relevant in the present context, it is necessary to educate the shareholders. Many objections, criticism and questions raised by the shareholders are not included in the minutes of the meetings. It was only when a shareholder makes arequest in writing, he gets a copy of the minutes. Corporate lawyers suggest that in order to increase the participation of more shareholders in the AGM process, postal ballot should be introduced. At present, if a shareholder is unable to attend a AGM, he can send a proxy who can vote. But postal ballots are not allowed.If postal ballots are introduced, shareholders can vote without sending anyone to far off place like Hazira or Vijayanagar. ``This would inculcate more discipline among the investors and usher corporate governance,'' Dave said.

At the same time, shareholders should also learn to become more responsible. During an AGM, shareholder should avoid praising the management and ask relevant questions. The three minutes allotted to them are crucial for their own investments.

The promoters of the sick companies and bad managements should make way for takeovers and shareholders should support the best management. Indian corporates still lack transparency with their shareholders. If Indianshareholders wake up and demand their rights, a new era of better corporate governance would emerge.