The Korea Listed Companies Association and the KOSDAQ Listed Companies Association recently looked into 754 KOSPI-listed and 1,275 KOSDAQ-listed companies with a fiscal yearend of December and announced on April 2 that a total of 340 companies have failed to win approval on their agenda items due to an insufficient quorum.
The ratio of such companies, which stood at 3.9 percent in 2018, jumped to 9.4 percent in 2019 and 16.8 percent this year. The abolition of shadow voting and the limitation on the largest shareholder’s shareholding in director appointment are mentioned as causes of the increase.
Auditor appointment accounted for 92.6 percent of the rejected items, followed by a change in the articles of association (12.1 percent) and director compensation approval (5.3 percent).
According to the associations’ survey, the companies with the rejected items provided shareholder meeting-related information before statutory deadlines and actively adopted electronic voting and power of attorney for a higher participation rate. Specifically, most of the companies completed agenda disclosure more than three weeks ahead of the date of shareholder meeting and 86 percent of the companies introduced electronic voting.
“The shadow voting was abolished in 2017, and then the auditor appointment demand increased to result in a large number of rejections,” the associations explained, adding, “The commercial code needs to be revised without delay and the 3 percent rule related to the largest shareholder’s shareholding in director appointment has to be repealed immediately.”