“A Dramatic Walkout: The SGS Shareholder Meeting Takes an Unexpected Turn”

The SGS 2024 Annual General Meeting took place this morning, July 10, 2024

Questions arose regarding the meeting’s rules and voting procedures.

During the meeting, several shareholders expressed confusion over Article 4.12 of the proposed rules, which outlines the minutes and resolutions of the AGM: “All matters discussed at the AGM must be recorded by the meeting secretary in the minutes of the AGM. The minutes and resolutions of the AGM must be read and approved before the meeting is adjourned. To clarify, regardless of the results of previous votes, the full minutes and resolutions of the AGM shall be approved when at least 65% of the total votes of all attending shareholders agree. This will be the final legal document and shall be binding on all shareholders of the Company and the Company itself.”

One shareholder objected, stating: “The issue with Article 4.12 is that it essentially allows for a second vote. This gives the presiding committee the opportunity to overturn previous decisions if they feel unfavorable.”

The shareholder further requested that the presiding committee amend Article 4.12 to remove the need for a second approval of the full minutes and ensure that the meeting minutes accurately reflect everything that transpired during the meeting.

Another shareholder echoed similar sentiments, adding: “From a small shareholder’s economic perspective, if certain items have already been approved, and then, due to the presence of two large shareholders, a decision is overturned later in the meeting, it renders our presence here meaningless. We might as well leave.”

In response to these concerns, SGS representatives clarified that this article was not new and had been included in the rules of the 2022 AGM as well, where separate votes were held for individual items before a final vote was taken on the entire meeting’s resolutions. On that occasion, one of the major shareholders, Global Logistics Services JSC (GLS), had exercised its right to veto, overriding the previous votes.

The meeting then proceeded to vote on this issue, and the majority agreed to not approve the proposed rules and voting procedures for the AGM. As a result, Article 4.12 was amended to the following: “All matters at the AGM must be recorded by the meeting secretary in the minutes of the AGM. The minutes of the AGM must be read and approved before the meeting is adjourned.”

Delay in Publishing Audited Financial Statements for 2022 and 2023

Among the proposals presented at the meeting was the approval of separate and consolidated financial statements for the previous years, 2022 and 2023. Shareholders raised concerns about the fact that these statements had not yet been audited.

The auditing firm, AASCS, was present at the meeting and provided clarification on this matter. They explained that while they had already issued their audit report, the management of SGS had not signed it due to some identified inaccuracies. Both parties agreed to make the necessary corrections before releasing a final report.

AASCS further emphasized that they had issued an adverse opinion on SGS’s financial statements, but the management had not provided feedback on the key adjustments proposed by the auditors, preventing the release of the final report. They refuted the notion that the delay was solely due to the auditing firm.

Fiery Debate Leads to Unapproved Meeting Resolutions

Out of all the proposals presented at the meeting, only the one regarding the dismissal of Mr. Le Minh from the Board of Directors was approved. The remaining proposals were not endorsed, likely due to the dissenting votes from GLS.

Notably, in addition to Mr. Le Minh, there were three other proposals for the dismissal of Board members: Mr. Pham Van Huong, Mr. Nguyen Van Long, and Ms. Huynh Nhu Y, as well as a proposal for the dismissal of Ms. Duong Thi Kim Kieu from the Supervisory Board. None of these proposals were approved.

As per procedure, the meeting proceeded to elect additional Board members to fill the vacant positions. However, this process encountered numerous challenges and sparked fiery debates.

Firstly, one of the three members of the ballot counting committee, Mr. Nguyen Quang Viet, was absent. An attempt was made to elect a replacement, but the vote did not reach the required approval ratio.

This led to further disputes between the presiding committee and the shareholders, as well as between the representatives of the two major shareholders, GLS and the parent company of Saigon Transportation Mechanical Engineering Corporation (SAMCO). The GLS representative even suggested canceling the meeting and leaving prematurely.

The meeting extended into the afternoon, with a dwindling attendance as many shareholders left early.

Adding to the complexity, the head of the ballot counting committee, Mr. Pham Hoai Huan, expressed concerns about the legality of the election process.

Despite the challenges, the meeting continued with the election, ultimately resulting in the appointment of Ms. Le Thi Thanh Thuan, who prevailed over three other candidates. Ms. Thuan was nominated by the parent company, SAMCO, and currently serves as the Vice General Director of SGS and the General Director of Binh Minh Logistics JSC.

In the ballot counting committee’s report, Mr. Huan highlighted the following concerns about the election: “Firstly, Mr. Viet left, and the meeting elected a replacement, but the vote did not pass. Secondly, shareholders left, booed, and objected, and the meeting showed signs of being conducted unfairly, with only Mr. Phan Phuong Dong counting the votes. Thirdly, I have not received a response from the presiding committee regarding my role as head of the ballot counting committee.”

In the end, the AGM resolutions were not approved due to an insufficient approval ratio.

Huy Khai