End mass shareholders meetings
Of all listed companies in Korea, 19.7 percent held their annual general meetings with shareholders on Friday, ahead of 40.2 percent that will hold theirs a week later. The meetings next Friday are considered exceptional, given the overwhelming number of companies holding their events on the same day to avoid troublesome minority shareholders. In 2013, 47.3 percent held their stockholders meetings on the same day, while 48.8 percent did so in last year.
When meetings are held on the same day, it is difficult for minority shareholders to exercise their rights as stockholders. Most take place between 9 and 10 a.m., which makes it nearly impossible for minority holders to participate in more than one meeting. As a result, they don’t know what kinds of decisions their companies are making or what kind of future strategies they have established. This year’s general meetings were no different.
One of the hot issues this year was how to keep in check listed companies’ deep-rooted practice of appointing retired yet powerful government officials as outside directors. Needless to say, the corporate sector’s preference for former officials from powerful government organizations stems from a practical need to hire them as a shield - or lobbyists - against government pressures, instead of bringing them in for their expertise. As it turns out, 47 out of 119 outside directors appointed or to-be appointed at shareholders meetings held by the 10 largest conglomerates this year hail from powerful government offices including the Blue House, prosecution and Fair Trade Commission. Unless institutional investors or minority stockholders hold them in check, no one can do it. Yet only 1.4 percent of institutional investors opposed the idea of inviting former high-ranking officials as outside directors.
Shareholders general meetings held at the same time on a single day no doubt hurt the sacred rights of shareholders, the de facto owners of listed enterprises. Despite the introduction of an electronic voting system at such meetings five years ago, many companies still don’t use them. Others refusing to adopt the new system even signing a contract with the Korea Securities Depository. Advanced countries like the United States, Britain and Japan actively implemented the system in the early 2000s. The government can refer to Turkey’s case, in which electronic votes are mandatory for shareholders general meetings. The authorities must find effective ways to end such shameful practices in our corporate world.
JoongAng Ilbo, March 14, Page 30
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