Gifts at AGMs (annual general meetings) may become a thing of the past for shareholders. In a bid to put an end to the distribution of food coupons and gift items at AGMs, the Ministry of Corporate Affairs has suggested banning the practice.

The Ministry is of the view that collection of gifts, coupons and snack packets distracts the shareholders from the main business of debating on resolutions during the meeting.

“The companies offer gifts, extravagant food and other charms to shareholders who attend AGMs to divert their attention from the main purpose of the meeting and their right of key role in the management of the company,” said a draft circular by the Ministry.

It quoted the Secretarial Standards on General Meeting issued by the Institute of Company Secretaries of India, which specifically mentions that no gifts, gift coupons or cash in lieu of gifts should be distributed to the members at or in connection with the meeting.

Keeping the principle of good governance in view, no company shall offer any other thing except tea, coffee, soft drinks and snacks during and before AGMs, the Ministry said.

Any other gifts or enticement would be treated as misconduct on the part of board of directors who would have to pay back the cost of such expenses to the company. Furthermore, they would be liable for penal action as provided under Section 168 of the Companies Act, 1956 for not convening the AGM properly as required under section 166 of the Companies Act, 1956.

The Ministry has invited views and comments of stakeholders on the draft circular before August 14.

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