Era of Same-day Electronic Voting to Begin
Starting in March of next year, the era of electronic shareholders meetings will commence. With the full introduction of online voting at shareholder meetings, allowing same-day voting, the atmosphere of future shareholder meetings is expected to undergo a significant transformation.
According to the financial investment industry on Sept. 10, the Ministry of Justice decided to introduce the system of electronic shareholders meetings, which electronically encompasses voting and the overall proceedings of shareholder meetings, on Aug. 24.
The main essence of this decision is to legally allow both “fully electronic shareholders meetings,” where all shareholders attend and vote in online meetings, and “concurrent electronic shareholders meetings,” where meetings are conducted in a manner that allows attendance and voting either online or in-person according to individual preferences. It also recognizes the exercise of voting rights through this approach. Under current law, it is not possible to hold shareholder meetings exclusively online.
The notice of the shareholders’ meetings will also be expanded to include electronic communication means. Under the current law, when convening a shareholders’ meeting, written notices must be sent to each shareholder two weeks prior to the meeting, or electronic notices must be sent with the consent of each shareholder.
The Ministry of Justice is planning to present the bill to the National Assembly by next month and introduce it from next year’s shareholders’ meetings. The atmosphere in the National Assembly is also positive. A ruling party official from the Legislation and Judiciary Committee stated, “The introduction of electronic shareholders meetings has been a consistently raised issue of necessity. We will expedite discussions as swiftly as the government’s proposal and submit it to the plenary session.”
With the possibility of same-day electronic voting, there is an expectation that the voting power of small shareholders, or individual investors, will strengthen. The analysis suggests that with the elimination of constraints related to time and location, both attendance rates and voting percentages are likely to dramatically increase.
Until now, shareholders had to be physically present to vote on the day of shareholders’ meetings. During “Super Shareholders Meeting Days,” when multiple shareholder meetings were scheduled for the same day, it was practically difficult to exercise voting rights properly. Most of these meetings took place on weekday mornings, making attendance impossible for those with daytime commitments.
Even with electronic voting, there have been criticisms of “blind voting” or “passive voting” because shareholders are required to vote on the agenda one day before the meeting without specific explanations. In fact, according to Korea Securities Depository data, the number of shares that voted electronically was approximately 5.23 billion in the regular shareholders’ meetings held in March this year, accounting for only about 10.2 percent of the total shares eligible for voting of approximately 51.26 billion shares.