“Corporate Governance and

Social Responsibility”
MS-438
Lecture 04
“ The Shareholders”

By: Majeed Ullah Khan

Asst. Professor, Institute of Business Studies
KUST
Topic: The Share Holders

Teaching Agenda

Institutional Investors
What shareholders expect from the companies
Tools available to shareholders
Annual General Meetings
Shareholder Activism

Course: Corporate Governance and Social Responsibility, MS-438-- Instructor: Majeed Ullah Khan, Asst. Prof. Institute of Business Studies, KUST -- Email:
majeedullah@kust.edu.pk
Topic: The Shareholders

Institutional Shareholders
Financial institutions that invest for returns in share or bonds:
Mutual Funds
Managed funds
Pension Funds
Life Insurance companies
Banks

Course: Corporate Governance and Social Responsibility, MS-438-- Instructor: Majeed Ullah Khan, Asst. Prof. Institute of Business Studies, KUST -- Email:
majeedullah@kust.edu.pk
Topic: The Shareholders

Capabilities of Institutional shareholders

Possess large sum of money
Qualified and professional staff
Meet different expectation of client
Short term and long term investment
Play role in shareholders activism
Influence decision making process
Monitor the performance of investee companies
Attention to large number of companies by fund managers
Course: Corporate Governance and Social Responsibility, MS-438-- Instructor: Majeed Ullah Khan, Asst. Prof. Institute of Business Studies, KUST -- Email:
majeedullah@kust.edu.pk
Topic: The Shareholders

What do shareholders expect?

Board should be accountable to them
Transparency in BOD decision making
Directors should promote interest of all stakeholders
Directors should managed company efficiently and effectively
Unreasonable remuneration should be discourage
Profit should equitable distributed

Course: Corporate Governance and Social Responsibility, MS-438-- Instructor: Majeed Ullah Khan, Asst. Prof. Institute of Business Studies, KUST -- Email:
majeedullah@kust.edu.pk
Topic: The shareholders

Annual General Meeting (AGM)

Company law and articles of association of companies provide for AGM
AGM is once in year
Tool for shareholders to control BOD
AGM approves financial statement, major transaction, major expenditures, related
parties transaction, auditors appointment

The Combined Code suggested that;

Company must encourage attendance in AGM
Shareholders be encourage to put queries
Each item should put separately rather than group in one resolution
vote count based on 1 vote 1 share
Shareholder may authorized any to attend AGM
Course: Corporate Governance and Social Responsibility, MS-438-- Instructor: Majeed Ullah Khan, Asst. Prof. Institute of Business Studies, KUST -- Email:
majeedullah@kust.edu.pk
Topic: The shareholders

Shareholders Activism
Shareholders become united to stand against the decisions of Board
It can cause with drawl of recommendation of Board in AGM
It give signals to board about feeling of shareholders
Shareholder activism is prominent in developed countries
The areas in which shareholders show their dissent are;
Re-election of directors Changes in share capital
Re-appointment of auditor Approval of right issue
Approval of directors remuneration Approval of related party transaction
Approval of financial statement
Dividend recommendation
Course: Corporate Governance and Social Responsibility, MS-438-- Instructor: Majeed Ullah Khan, Asst. Prof. Institute of Business Studies, KUST -- Email:
majeedullah@kust.edu.pk
Topic: Internal Control

THANK YOU

Course: Corporate Governance and Social Responsibility, MS-438-- Instructor: Majeed Ullah Khan, Asst. Prof. Institute of Business Studies, KUST -- Email:
majeedullah@kust.edu.pk