Asian Corporate Governance Association report… “There is almost no progress compared to 2006,” he said bitterly.
General shareholders meeting (CG)
[연합뉴스TV 캡처]
(Seoul = Yonhap News) Reporter Song Eun-kyung = Overseas investors have pointed out that problems in the general shareholders’ meetings of domestic listed companies that prevent the participation of foreign shareholders have hardly improved compared to 20 years ago.
According to the financial investment industry on the 10th, the Asian Corporate Governance Association (ACGA) analyzed the difficulties that foreign shareholders face at general shareholders’ meetings of domestic listed companies in a report recently published called ‘Navigating the Maze-like General Shareholders’ Meeting in Korea.’
ACGA is a non-profit organization established in 1999 to improve the corporate governance environment in Asia. Its members include major pension funds, sovereign wealth funds, asset management companies, global investment banks (IBs), listed companies, and accounting firms around the world.
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ACGA said in a report that while planning to visit Korea with its member companies in time for the annual general meeting season in March of this year, it learned that many of the obstacles that existed almost 20 years ago still remain.
In 2006, ACGA published a research report comparing markets in 10 Asian countries, advocating for the advancement of voting rights exercise systems across Asia. At that time, Korea ranked 8th out of 10 countries.
ACGA researcher Stephanie Lin said, “Based on the experience of the ACGA delegation last March, it appears that little progress has been made,” due to the short 14-day notice period for general shareholders’ meetings, the business report being published only before the shareholders’ meeting, and the lack of information on director compensation. , cited problems such as a tight voting schedule for foreign investors and a concentration of shareholders’ meetings held mainly at the end of March.
Researcher Lin cited a survey conducted by the Capital Market Research Institute that found that more than 70% of KOSPI-listed companies issued a notice to convene a general meeting of shareholders two weeks in advance, and said that the 14-day notice period for a general meeting of shareholders stipulated by the Korean Commercial Act is 14 days in China (20th), India (21st), It was pointed out that it was too short compared to Taiwan (30 days).
He said, “Because the notice period for general shareholders’ meetings is short, there are cases where people have to vote without having the opportunity to review the entire agenda. When proposing an amendment to the articles of incorporation, only a brief outline is disclosed without specifying the contents, so people vote without knowing the details.” “Under these circumstances, there are many cases in which people vote against,” said one member company’s experience.
In addition, Korean commercial law requires business reports and audit reports to be disclosed one week before the general shareholders’ meeting, but ACGA explained that this period is too tight for foreign investors, so they end up exercising their voting rights without seeing the latest financial data.
Currently, voting on the agenda of a foreign management company’s general shareholders’ meeting in Korea is done through a local voting service provider and a global custodian bank, and the Korea Securities Depository collects the votes cast and delivers them to the company.
Researcher Lin said, “There is no clear basis for the Korea Securities Depository to close foreigners’ voting earlier (than the general shareholders’ meeting day),” and as a result, the time for foreign shareholders to review and analyze the agenda for the general shareholders’ meeting is only 3 to 5 days, and in some cases, Accordingly, it was reported that there were cases where only half a day was left.
Recently, shareholder meetings are gradually becoming more ‘shareholder-friendly’ due to improvements in dividend procedures and the introduction of electronic voting systems, but Researcher Lin also said, “These changes have not been widely adopted,” adding, “The focus on the timing of shareholder meetings is still excessive, and there is still an excessive amount of focus on director compensation and specific factors.” “Transparency of key information such as voting results is still limited,” he pointed out.
He added, “Procedural obstacles such as proxy requirements, language barriers, and coordination between multiple institutions in different time zones make it more difficult for foreign shareholders to participate.”
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2024/11/10 06:05 Sent
