Companies wrestle with annual-meeting red tape

Companies are finding the revised commercial law their biggest problem in preparing for shareholders’ meeting as it requires them to submit extra documents, a survey by the Korea Chamber of Commerce and Industry (KCCI) showed yesterday.

The KCCI surveyed 230 companies listed on the Kospi on their thoughts about shareholders’ meeting, and 48.3 percent said they find preparing additional documents the biggest hassle for annual general meeting. Other pet peeves were shareholders causing fusses at meetings, ensuring a quorum and preparing for external audits.

Companies must hold annual general meeting within 90 days of the end of the fiscal year and submit financial reports six weeks before the meeting takes place to auditors.

Under the revised commercial law that came into effect last April, companies are required to submit additional documents including changes in equity, cash flow statements and consolidated financial statements.

“Preparing documents and meeting other requirements to hold shareholders’ meetings is a big burden for companies,” said Jeon Su-bong, a senior official at KCCI. “The revised commercial law should be readjusted to allow companies to submit required documents four weeks before shareholders’ meeting from the current six weeks.”

Regarding the issue of pension funds (including the National Pension Service) strengthening their voting rights in shareholders’ meetings, 61.8 percent of the companies surveyed raised concerns that they could unnecessarily intervene in corporate management.

In regard to the Park Geun-hye administration’s “economic democratization” drive, which includes pension funds actively exercising their voting rights at shareholders’ meeting and moves to mandate a system that allows minority shareholders to transfer their rights to a candidate on the board of directors, 65.2 percent said it would have an impact on this year’s shareholders’ meetings, and 33.5 percent said it would only affect next year’s meetings.

In regard to the political circles’ interest in shareholders voting, 98.1 percent of respondents said the government should let companies decide the rules.

By Kim Mi-ju [mijukim@joongang.co.kr]