Full Implementation of Electronic Shareholders' Meeting System from Next Year... Improvement of Shareholder Buyback Rights

Starting next year, an electronic shareholder meeting system will be fully implemented, allowing all shareholders to access and participate in shareholder meetings online and exercise their voting rights. Legal grounds will also be established to grant shareholders who oppose a physical division exceeding 10% of the total assets of the divided company the right to request the purchase of their shares.

Minister of Justice Han Dong-hoon [Image source=Yonhap News]

On the 24th, the Ministry of Justice announced a legislative proposal for amendments to the Commercial Act containing these provisions. According to the amendment, companies will be able to hold electronic shareholder meetings where notifications, voting, and meetings are all conducted online. Both “fully electronic shareholder meetings,” where all shareholders attend online, and “hybrid electronic shareholder meetings,” where shareholders can choose between online and offline participation simultaneously, will be permitted. To clarify the method of obtaining shareholder consent when notifying the meeting via electronic documents, the Ministry of Justice plans to explicitly state in the Presidential Decree that shareholder consent can be obtained through electronic documents.

A new regulation will require unlisted companies to grant the right to request the purchase of shares to shareholders who oppose a physical division involving business assets exceeding 10% of total assets. The right to request the purchase of shares is a right that allows dissenting shareholders to demand the company buy their shares when a decision significantly affecting shareholder interests is made. While listed companies have been granted this right for opposing shareholders of physical divisions since the amendment of the Enforcement Decree of the Capital Markets Act in December last year, unlisted companies have not had this provision until now.

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