Annual company meetings could be crisis casualty

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Annual company meetings could be crisis casualty

With the possibility of annual meetings of shareholders being canceled due to the coronavirus outbreak, financial regulators are taking the unprecedented step of allowing for a delay of the meetings.

It is also encouraging the use of innovative technologies that will allow for the business of the yearly get-togethers to get done remotely.

Many companies hold these gatherings in March.

As hundreds or even thousands of shareholders show up for the annual general meetings for the formal issuing of the results and for voting, large crowds invariably show up for the events.

It is a recipe for exposure to the new coronavirus.

Earlier this week, Samsung Electronics, Korea’s largest company, changed the location of its shareholder meeting from its office building in Seocho District, near the crowed Gangnam Station, to a spacious convention hall in the less bustling city of Suwon, Gyeonggi.

The meeting of the tech company is set for March 18, and over 2,000 shareholders will likely turn up.

Samsung Electronics explained that the shift is intended to serve “convenience of the shareholders” on its notice.

A workaround for companies could be electronic voting that allows shareholders to cast their votes online. But few companies are actually utilizing this technology.

Currently, 63.1 percent of Kospi-listed companies and the junior Kosdaq have signed contracts to use the electronic voting systems.

But the actual rate of voting on these systems remains far lower, at 5 percent of all listed companies, according to the Korea Securities Depository.

This year is the first year when Samsung Electronics, Hyundai Motor and other Hyundai Group companies adopt the electronic voting.

The completion of financial reports may also be affected.

An audited statement must be released a week before the annual meeting.

With some corporations cleared out and accounting firms on skeleton staffs, completing the work may be difficult.

Offices of Samil PricewaterhouseCoopers (PwC), the largest accounting firm in Korea, went into a complete shutdown this week after the buildings were visited by a person infected.

Samil PwC advised all of its employees to work from home or on-site at the offices of clients, although the company explained its digitalization efforts will lessen the impact.

The Financial Services Commission stepped in to help ease the trouble on Wednesday, exempting affected companies from fines for belated submission of documents, including financial statements and business report to the regulator.

Still, for a company to be entitled for the exemption, it must have shut down for cleaning.

The regulatory agency said that some 75 listed firms might qualify for the exemption.

BY PARK EUN-JEE, HONG JI-YU [park.eunjee@joongang.co.kr]
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