One abnormal corporate practice in Korea is that many listed companies hold their annual meetings of shareholders on the same day. Here, March is the convention season for companies that file their annual reports in December. On certain days of the month, especially the second and third Fridays, hundreds of companies convene their general assemblies.
This year is no exception. On March 14, a total of 116 companies, including the 17 listed affiliates of Samsung Group and seven subsidiaries of Hyundai-Kia Automotive Group, held their shareholders’ meetings simultaneously.
A real super shareholders’ day will come Friday, when a whopping 662 listed companies are to convene their general assemblies. They include KT, SK Telecom, Hyundai Heavy Industries, Naver and SK Hynix.
One problem with the concentration of shareholders’ meetings on certain days is that shareholders with stakes in multiple companies cannot exercise their rights properly at company shareholders’ meetings they cannot attend.
In this regard, companies are suspected of intentionally convening their general assemblies on the same day to ensure that their agendas are approved without being questioned by minority shareholders.
So general assemblies are usually conducted at lightning speed. On average, they last about half an hour, too short a time to discuss important corporate issues.
Another reason is the regulation that requires companies to submit their annual reports to the financial regulator and stock market authorities within three months of the end of their fiscal year. As annual reports must be approved by shareholders before submission, companies are compelled to hold general assemblies before the end of March.
To avoid a clustering of shareholders’ meetings, advanced countries often allow companies to hold their general assemblies after the submission of their annual reports, with the decisions made at general meetings supposed to be reflected in the reports later on.
To address the problem, the Korean government introduced in 2010 an electronic voting system allowing shareholders to participate and vote electronically in general assemblies.
But few companies have thus far bothered to use the system. One main reason is that electronic voting is not compulsory. This illustrates domestic companies’ disregard for minority shareholders’ rights.
Yet they will have to embrace electronic voting from next year, as they will no longer be able to take advantage of the shadow voting system.
Thus far, they have been able to hold general assemblies without the presence of a sufficient number of shareholders thanks to the mirror voting system, in which the proportion of votes that are cast is carried through to represent nonvoting shareholders. This convenient system will not be in place next year.