A. Explanation

This Provision covers the communication which should take place between the Board and all shareholders so that the Board can better understand the views of shareholders.
The previous Principle and its Provisions focus on the communication with shareholders and rights of shareholders at general meetings.

It is important for the Board to establish and maintain regular communication with shareholders beyond the formal general meetings. It is better for the company and the Board to know these views, and to understand and address their concerns.

For many companies, the ongoing engagements with shareholders tend to be conducted by management (without Board participation) through roadshows and other forms of communications.

Although the Provision does not state how the Board should go about communicating with shareholders, the following methods may be useful:

• Stay after the formal general meeting is over to meet up informally with shareholders during the reception.
• Attend investor roadshows, investor meetings, and shareholder days.
• Attend product launches and major marketing events where investors may be present.
• Organise shareholder trips of select Board members, management and major shareholders.
• Participate in online sessions with shareholders using interactive technology.

Other Provisions state that shareholders should be provided with an appropriate contact for answering questions and providing responses (Provision 12.3), and a corporate website with which to communicate and engage with stakeholders (Provision 13.3).

The Board should also disclose the mechanics of the Board’s engagement with its shareholders. Such a disclosure serves two purposes:

• The need to disclose could spur some Boards to actually engage with shareholders.
• Shareholders will know what has been done and judge the fairness or, indeed, transparency and adequacy of such communication.

B. Practice Guidance

• Practice Guidance 12: Engagement with Shareholders.

C. Related Rules and Regulations

• Nil.

D. CG Guides

• Board Guide 4.9: Investor Relations [Board Duties].
• Board Guide 7.2: Shareholders. [Stakeholder Engagement].

E. Related Articles

• “Riding out a short-seller crisis” by Elaine Lim. (390KB)
• “Effective shareholders' communications” by Daniel or Lay Huat. (118KB)
• “Rethinking board and shareholder engagement in 2008” by Ira M. Millstein, Holly J. Gregory & Rebecca C. Grapsas. (293KB)
• “Engagement with shareholders by independent directors” by Mike Gray. (88KB)