Financial Supervisory Service headquarters in Seoul / Yonhap

Listed companies will now be required to share thorough details of shareholder proposals they receive and actions taken in order to proceed with proposals to investors in their regular public disclosures, financial authorities announced Thursday.

According to the revised public disclosure forms by the Financial Supervisory Service (FSS), listed companies must disclose, without exception, every shareholder proposal suggested by minority shareholders in their business reports.

The country's Commercial Act stipulates that listed companies are required to disclose their latest business reports at least one week prior to their shareholders' meetings, aiming to ensure that investors have sufficient information before the meeting.

However, previous disclosure standards for the obligatory business report submission did not encompass a few months' period spanning from the end of a business year until shareholders' meetings that fall mostly in spring, resulting in overall omissions of shareholder proposals presented at shareholders' meetings in companies' regular business reports.

As the FSS fixes the disclosure standards with the new rules taking effect Friday, listed companies will be obliged to provide not only brief titles of shareholder proposals, but also detailed information on who makes the proposals, what is contained in the proposals, whether they are adopted at shareholders' meetings or not, as well as reasons for rejecting them.

The change in the disclosure standards is to offer sufficient understanding about submitted shareholder proposals to investors, so that they can exercise their voting rights accordingly before shareholders' meetings.

In addition, listed companies must disclose how such proposals were dealt with at shareholders' meetings in their later regular review reports.

The number of companies adopting shareholder proposals at their regular shareholders' meetings rose from 26 in 2020 to 46 last year. The number has already totaled at 40 this year.

"Through the revision of disclosure forms, companies' dealings over shareholder proposals and follow-up discussions on them will be disclosed more promptly and faithfully. It is expected that the change will contribute to both the smooth operation of shareholders' meetings and rational decision-making by shareholders, thereby furthering the development of advanced capital markets in the country," an official from the FSS said.