As the revised commercial law bill is set to pass the National Assembly's plenary session, interest in the mandatory introduction of electronic shareholder meetings (electronic general meetings) included in the bill is rising in the industry. If the bill passes, it is expected that the mandatory holding of electronic general meetings will be enforced for some listed companies after a one-year grace period.
Currently, the Korea Securities Depository is proactively starting to construct an electronic general meeting platform, but there are voices of concern among listed companies regarding system stability and expense burdens.
The commercial law bill proposed on the 5th requires that certain listed companies, as designated by presidential decree, must hold electronic general meetings going forward. The core of this revision is to transition the operation method so that shareholders can participate in general meeting resolutions remotely and in real time. Once the law revision is implemented, shareholders can participate in resolutions without having to attend directly at the venue, which may be far from them.
On the day of the general meeting, being able to exercise voting rights remotely and participate in Q&A is different from the existing "electronic voting". Electronic voting typically involves a prior voting method where voting rights are exercised in advance through an electronic system until 5 p.m. on the day before the general meeting, meaning that there can be no participation in real-time communication or voting on the day of the meeting.
Once electronic general meetings become mandatory, the right to speak for minority shareholders is expected to significantly expand. Currently, most corporations hold general meetings in a concentrated manner during the last week of March, creating an extreme phenomenon of "general meeting clustering." As a result, shareholders who have invested in multiple corporations can only participate in some general meetings due to time constraints. Institutional investors face similar circumstances.
According to a recent survey by the Capital Market Research Institute, 95% of the general meetings held last year were concentrated within 7 business days. In some cases, certain listed companies hold general meetings in provinces far from their headquarters, limiting participation for small investors and raising voices for system improvement.
The issue lies in the system. The construction of electronic general meetings requires a more complex and advanced system than existing electronic voting. It is observed that the Korea Securities Depository and some securities companies with experience in electronic voting may have an advantage in platform construction. However, most securities companies do not operate electronic voting systems due to profitability concerns, making them likely to be passive in developing electronic general meeting platforms.
Proactively starting the construction of an electronic general meeting platform is the Korea Securities Depository. According to the depositary, the electronic general meeting platform is expected to consist of processes such as ▲attendance confirmation ▲video broadcasting ▲Q&A ▲voting ▲tabulation.
Depending on the shareholders' choice, there will be a hybrid method allowing for direct attendance at the meeting location or electronic attendance, and electronic voting at the venue is also under consideration.
In the industry, there is agreement on the intention behind the introduction of the system, but concerns are expressed about making it mandatory in a situation where side effects are anticipated. In particular, it is pointed out that it is difficult to accurately verify whether voting rights are exercised, and that when communication failures or system errors occur, the responsibility is unclear.
There are also concerns that the burden of expenses associated with platform use and a significant increase in shareholder participation could make the general meeting procedures excessively cumbersome.
An industry representative noted, "While I agree that the introduction of electronic general meetings is necessary to protect the rights and interests of individual shareholders, the method should be based on voluntary choice rather than mandatory requirements," adding that "If participating shareholders surge, attempts to disrupt the general meeting maliciously may increase."
Another representative stated, "The electronic general meeting is not simply about moving the meeting venue online," noting that "It can be seen as a task that requires a comprehensive overhaul of regulations regarding shareholders' rights such as attendance, speaking, and questioning rights."