Dear Editor,
The latter captioned ‘Could Mr Ram lead the DDL shareholders in taking the matter of dividend size further forward?’ by Mr George Cave of May 19, 2017 raises important issues of corporate governance. I still hold my view about the distribution to shareholders attending DDL’s AGM of a bottle of rum during the Lenten season. But there is a bigger issue involved.
The giving of gifts at AGMs, particularly by Banks DIH and DDL, is bad for the very reason that it is popular. Years ago, I advocated that we should adopt the principle set by the Institute of Company Secretaries of India, and now endorsed by that country’s Corporate Ministry, that the practice of “gifts, extravagant food and other charms to shareholders who attend AGM … divert[s] the attention of the shareholders from the main purpose of AGM and their right of key role in the management of the company through AGM.” Directors are now not only personally liable to pay back the cost of such expenses to the company but are also liable to penal sanction. More generally, the practice also violates the rule that all shareholders must be treated equally, whether they attend meetings or not.
Mr Cave suggests that I take up on behalf of shareholders the issue of dividends by DDL. Perhaps we need a broader and more general approach. He may recall the activism in the New Building Society some years ago until it was effectively shut down by Dr Ashni Singh via the legislative route. We should resuscitate that effort.
He also refers to a DDL meeting at the Cultural Centre. I recall attending only one DDL meeting and that was at the Diamond Complex at which I was verbally attacked, lynch mob style, for my criticisms of the Board. But assuming that I did attend the meeting at the Cultural Centre, I would have known that it would not be legally possible for shareholders to increase the dividend recommended by the directors. (See By-law 20 of the Third Schedule to the Companies Act).
Yours faithfully,
Christopher Ram
