A total of 642 listed firms in South Korea have sought the practice of shadow voting this year to meet quorum requirements for approval at their annual meetings of shareholders, sharply up 40 percent from a year ago, data showed Wednesday.
Shadow voting, or mirror voting, is a practice under which companies can ask stocks registered with the Korea Securities Depository to vote in the same proportion as voters who participate in an annual shareholder meeting.
Introduced in 1991, the practice is seen as essential to meet quorum requirements, but critics say shadow voting is often manipulated by major shareholders to pass a controversial decision, diminishing shareholder democracy.
This year, 26.1 percent of Kospi-listed firms, or 193 companies, sought to use shadow voting, while 37.8 percent of Kosdaq-listed firms, or 448 companies, relied on the practice, according to the KSD data.
One company listed on the Konex market also sought to use a shadow vote this year, the data showed.
South Korea had planned to abolish the shadow voting policy in 2015, but decided to encourage firms to adopt an electronic voting system due to worries that many companies could not meet quorum requirements.
Electronic voting allows minor investors who are not able to attend shareholders' meetings to exercise their voting rights via the Internet, giving them greater ability to curb power abuse by major stockholders. (Yonhap)