The Fourth Asian Roundtable on Corporate Governance Shareholder Rights and the Equitable Treatment of Shareholders Richard S. Roque William E. Simon & Sons (Asia) Limited Ensuring Meaningful Participation in Shareholders Meetings Mumbai, India November, 2002 The views expressed in this paper are those of the author and do not necessarily represent the opinions of the OECD or its Member countries, the ADB or the World Bank

Key Determinants in Promoting Shareholders Participation 1.Controlling shareholders’ attitude toward the Minority Shareholders 2.Role and attitude of Regulators

4 Attitudes of Controlling Shareholders toward the Minorities 1.Minority Shareholders as “Partners” and “Co-owners” 2.Minority Shareholders as “Prey” 3.Patriarchal approach to Minority Shareholders 4.“Take it or Leave it” approach to Minority Shareholders

Family Control of Publicly Listed Corporation at the 20% Level Hong Kong66.7% Indonesia71.5% Japan9.7% Korea48.4% Malaysia67.2% Philippines44.6% PRC80.0%* Singapore55.4% Taiwan48.2% Thailand61.6% Source: World Bank Research Papers *Government-owned (Source: China Centre for Economic Research)

Approaches to Remold Controlling Shareholders Attitude Key Focus of Approach is Fostering the “Right” Business Culture 1.Promote role models in the corporate community 2.Education starting from an early age (High School) and establish Corporate Governance Institutes 3.Involve Private Equity Funds whose mandate is to promote Corporate Governance and mentor young companies and entrepreneurs in best practices

Role and Attitude of Regulators: 1.Pro-active 2.Ensure that the market is fair to all and cognizant that they need to protect the interest of the minorities who are typically subject to abuse 3.Take the attitude that high concentration of control present obstacles to the development of good corporate governance practice and the role of the Regulators should be to balance that concentration of control 4.Prepared to intervene in commercial issues when necessary

Other Important Determinants in Promoting Shareholders’ Participation 1.Legal Framework: Corporate Legislation; Company Ordinance and Listing Rules 2.Presence of “truly” Independent Directors in a Board that is Balanced

Institutions to Promote and Enhance Shareholders’ Participation 1.Media 2.Commentators 3.Institute of Directors and Corporate Governance Research Centers 4.Value Centers 5.Investor Relations and Proxy Solicitation Firms 6.Specialized Research Services

Other (i.e. Non-institutional related) Elements That Can Enhance Shareholders Participation 1.Shareholders mix 2.Use of emerging interactive technology to facilitate direct communication by a company with its shareholders 3.Facilitating and Simplifying procedures at Shareholders Meetings