"Separation of Record Date for Voting Rights and Dividend Date"
As financial authorities push to improve dividend procedures so that investors can decide whether to invest after the dividend amount of listed companies is confirmed, listed companies must amend their articles of incorporation at this year's regular general meeting of shareholders. This is because the separation of the dividend record date and the voting rights record date is necessary.
On the 26th, the Financial Supervisory Service (FSS) announced, "Listed companies that intend to change the dividend procedure so that shareholders eligible for dividends are determined after the dividend amount is confirmed starting next year must amend their articles of incorporation at this regular general meeting of shareholders to separate the dividend record date from the voting rights record date." Under the current settlement dividend system, listed companies confirm the shareholders eligible for dividends (dividend record date) at the end of December each year, then decide the dividend amount at the general meeting of shareholders in March of the following year, and pay the dividends in April. However, as criticisms have continued that the current dividend system is a factor in the undervaluation of the Korean stock market (Korea Discount), the government announced at the end of last month that it will push for a system reform to allow the shareholders eligible for dividends to be determined after the dividend amount is confirmed.
Accordingly, if listed companies amend their articles of incorporation at the March general meeting of shareholders, the improved settlement dividend procedure can be applied from next year. The FSS urged listed companies to amend their articles of incorporation so that the dividend record date is not limited to the end of the settlement period (business year) when revising the articles. Even if the voting rights record date is set as the end of the settlement period, the dividend record date must be separately separated and stipulated. Furthermore, it emphasized that the articles of incorporation should reflect provisions allowing the dividend amount to be confirmed first, followed by the setting of the dividend record date.
If listed companies amend their articles of incorporation at this regular general meeting of shareholders, they will be able to apply the improved dividend procedures for this year's interim dividends and the 2024 regular dividends based on the amended articles. The FSS, the Korea Listed Companies Association, and the KOSDAQ Association plan to distribute guidance materials and hold briefing sessions to ensure the smooth progress of the articles of incorporation amendments by listed companies. An FSS official said, "Once the Capital Markets Act is amended to improve quarterly dividend procedures, we will actively support by reflecting the quarterly dividend improvements in the standard articles of incorporation and providing guidance."
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