주총 사전투표 결과 유출 관행, 집중투표제 9월 시행에 ‘암초’

Last March 24th, the regular board meeting of Koyote Equity was held, where the main shareholder, CEO Kyun-bum Choi's side and the largest shareholder, CEO Geun-won/Embi-kei's side, faced off directly for the reappointment of 5 of the 7 existing directors. Seven candidates, including Wu-ta Field Markalean and Kyun-bum Choi, sought support from shareholders.

The meeting applied the centralized voting system, introduced last year, which grants voting rights to shareholders proportional to the number of directors being appointed. Approximately 92,994,444 votes were cast, with the three Koyote Equity directors and the two Geun-won/MBK directors being elected. However, the difference in votes between Kyun-bum Choi (1,560,083,778) and Wu-ta Field Markalean (1,560,082,288) was only 90, making up just 0.0001% of the total votes.

A corporate investor pointed out 19th that "it's impossible for the Kyun-bum Choi's side to predict the pre-voting (mail/ electronic) results of domestic and foreign institutional investors and distribute votes unevenly for individual candidates." Koyote Equity denied this, stating "it's entirely incorrect, and Choi's side strategically distributed voting rights based on the candidates."

The main shareholders and the Geun-won/MBK partnership will again face off at the special board meeting on September 9th, electing one independent director and four non-executive directors. Since the amendment to the Act on Securitization and Exchange of Financial Instruments last year, listed companies with assets exceeding 2 trillion won must use the centralized voting system for all director appointments after September 10th.

This move aims to prevent the dominant shareholder from controlling the board and ensuring the protection of minority shareholders. However, there is concern that institutional investors submitting pre-voting results to the board meeting will be able to strategically allocate voting rights to their preferred candidates, undermining the centralized voting system.

The average institutional investor's stake in KOSPI-listed companies is between 50% and 60%, and they mostly cast votes through mail or electronic means. The governance of mail votes is completed three days before the board meeting, while electronic votes are submitted one day prior on the afternoon of the meeting. This creates a significant "information asymmetry" between the dominant and minority shareholders.

The centralized voting system may become decisive in determining director appointments, making it a critical variable. Multiple companies are attempting to sway institutional investors' pre-voting decisions by pressuring or threatening them, a practice considered highly unethical. Some capital market insiders noted that requesting or pressuring institutional investors to change their voting outcomes after voting is a well-established practice in the securities market, with some companies even hiring proxy advisors to alter their voting positions.

The Korean Association of Corporate Governance proposed in its proposal to the Special Committee on Capital Markets of the Democratic Party of Korea that the issuer (company holding the board meeting) should allow other guarantors to request pre-voting results if the issuer requests proxy voting. The Taiwanese government already publicly releases pre-voting results one day before board meetings.

The government's consideration of implementing the "Stewardship Code" as a follow-up to the amended Act on Securitization and Exchange of Financial Instruments could address this issue. The Stewardship Code is a voluntary guideline for fund managers, requiring them to actively manage investors' assets for their benefit. If the government continues to allow institutional investors to change pre-voting results after the fact, it would undermine the effectiveness of the Stewardship Code, potentially disadvantaging government pension funds.

The K-ESG Steering Committee has finalized a first draft of the Stewardship Code and plans to review institutional investors' compliance starting next year. The pension fund is also working on assessing institution investors' compliance with the Code.