Delayed AGMs may be indicators of bad news

MUMBAI: If a company has delayed its annual general meeting (AGM), it could be a sign of bad news. A new study shows that most companies that delayed announcing their annual results did not have good news to convey to investors. The study, " The Last Minute: Corporate India procrastinates" by Institutional Investor Advisory Services finds that last year, over 40% of the BSE 500 companies held their AGMs in the month of September – the latest month permissible for holding the AGM.

Companies with financial year ending March are required to hold their AGMs within the June-September period. Of the BSE 500 companies that reported losses in 2013-14, over 57% held their AGMs in September 2014. Also, 31 of these loss-makers waited till the very last day (30th September).


In comparison, only 41% of profit making companies waited till September to hold their AGMs. The study also found that the number of companies delaying their AGM until September also went up compared to the previous year.

A look at the return on equity (RoE) profile over the last two years also reveals that the median RoE has been the lowest for companies holding their AGMs in the month of September. In other words, companies with a weaker return profile seem to have put off the AGM until later. From the investor’s perspective, such a delay does not put the company in a good light, argues the investment advisory firm.

Given that this trend continues from the previous year, it may be construed that these companies are trying to avoid investor questions till they possibly can or are just not geared enough to handle the basic requirements of being listed.

"Sitting on the outside and looking in, investors may not be able to ascertain why companies delay holding their AGMs. But, given that a year-on-year correlation between losses and lower RoEs with holding AGMs in September cannot be denied, investors may be wise to take due notice," IiAS mentions in its report. At the other end of the spectrum, better performing companies with higher RoEs tend to hold their AGMs much earlier in June and July, finds the study. Investors may want to track the AGM timings more keenly from here onwards.