Bill to partially amend the Financial Investment Services and Capital Markets Act introduced
Democratic Party of Korea lawmaker Lee Kang-il, who represents Sangdang-gu in Cheongju, North Chungcheong Province, announced Monday that he is introducing a bill to partially amend the Financial Investment Services and Capital Markets Act, aimed at correcting the formalistic practices that have hollowed out shareholder meetings and ensuring minority shareholders can meaningfully exercise their rights.
Lee said corporate governance had undergone three rounds of amendments to the Commercial Act, yet shareholder meetings remained little more than rubber-stamp procedures rather than genuine forums for debate. He cited the clustering of annual general meetings in a narrow window of the year, short-notice convening, insufficient disclosure of director candidate information and compensation structures, and directors' irresponsible absences as the main causes.
The bill also addresses abuses of the cumulative voting system, under which companies have been found to check advance proxy results and then redistribute votes to favor management-backed candidates, defeating the system's original purpose. Lee also noted that even large listed companies with high foreign investor ownership often fail to provide English-language disclosures, hampering South Korea's stock market integration into global markets.
The proposed amendments introduce specific provisions designed to restore shareholder meetings' core functions of checks and oversight. Most notably, the bill would require directors of listed companies to attend shareholder meetings in person, and mandate that any absence due to unavoidable circumstances such as illness or accident be disclosed transparently on the company's website or equivalent platform.
To give shareholders adequate time to review agenda items, the bill would move the mandatory notice period for shareholder meeting convocation from the current two weeks to four weeks in advance, and require that director candidate information and business and audit reports be disclosed at the same time. Large listed companies, determined by asset size and other criteria, would also be required to publish notices in English.
The bill further strengthens minority shareholder rights in concrete terms. Qualifying minority shareholders would gain the right to propose agenda items on the appointment and removal of the meeting chair, and would be allowed to split their votes without prior notice. To ensure fairness in the cumulative voting process for director elections, the results of advance votes cast electronically or by written ballot would have to be disclosed by the day before the shareholder meeting.
"Under the current system, shareholder meetings have degenerated into a rubber stamp for major shareholders, with directors absent and information monopolized, completely failing to protect shareholder rights as the law intended," Lee said. "This bill closes the gaps on the ground — it establishes stronger board accountability and ensures minority shareholders' voices are genuinely reflected in corporate management. By bringing shareholder meeting practices up to global standards of transparency, we will fundamentally restore confidence in our capital markets."
bigroot@heraldcorp.com
