Concentration of shareholders’ meetings in late March deters attendance

Data released on Monday revealed a notable trend among listed companies scheduling their annual general meetings at the end of March, a pattern that has become more prominent over the last five years. This scheduling trend poses challenges for shareholders who wish to attend the meetings of multiple companies.

Although electronic voting is considered a crucial method for minor shareholders to assert their rights without physically attending meetings, its implementation by companies remains surprisingly low.

A report jointly published by the Korea Securities Depository (KSD) and the National Assembly Library, released on Monday, revealed that in 2023, a staggering 94.2 percent of listed companies scheduled their annual general meetings at the end of March. This compares to 90.4 percent in 2019, 82.6 percent in 2020, 91.8 percent in 2021 and 92.3 percent in 2022.

This trend persists into the current year, as evidenced by the schedule for this week alone, during which a total of 371 companies are set to hold their annual general meetings. The schedule becomes even more congested next week, with 1,684 businesses, accounting for 64 percent of all listed companies, slated to hold their meetings between March 25 and March 29.

The primary reason for this concentration lies in the fact that, in Korea, the fiscal year ends in December for most listed companies. According to the Commercial Law, companies are mandated to hold their annual general meetings within three months following the end of the fiscal year. Prior to this, companies must finalize their financial statements and undergo an external audit. The Korea Listed Companies Association estimates that, even under the most expedited scenarios, completing these preparatory steps requires at least six weeks.

Market observers also speculate that some companies intentionally schedule their meetings close to each other. This tactic may serve to dilute any potential criticism of management or negative discussions that arise during the meetings, as the sheer volume of news generated from the meetings of numerous companies could overshadow individual concerns.

Regardless of the intentions of the companies, the simultaneous scheduling of meetings compromises shareholder rights. According to data from the KSD, as of last December, there were 14.03 million minority shareholders, each holding an average of 5.97 shares.

To address this issue, an electronic voting system was introduced in 2010. Despite being introduced over a decade ago, the system has not achieved full adoption and widespread use. In 2023, the participation rate of electronic voting stood at only 11.62 percent.

“For companies, especially major shareholders, the incentive to implement electronic voting systems that facilitate the exercise of minor shareholders’ rights is lacking, primarily due to the costs associated with setting up such infrastructure,” said Hwang Sei-woon, a senior research fellow at Korea Capital Market Institute.

Some have gone a step further by proposing the adoption of online annual general meetings. This would enable shareholders to participate in the entire process remotely through online platforms.

In response, the KSD established a specialized unit in early March, with the goal of developing this system by next year. The Ministry of Justice also proposed an amendment to the Commercial Law last October to facilitate its adoption.