"March Shareholders' Meetings: Preparing at the Last Minute Is Too Late"... Proxy Voting Agencies Ignite Race for Early Contracts

As the regular shareholders' meeting season approaches in March, tension is mounting among listed companies. This is because discussions on amendments to the Commercial Act, the offensive from activist funds, and the organization of minority shareholder platforms are converging, making this year's meetings likely to be more fiercely contested than ever before.

As a result, companies are intensifying their competition to secure proven proxy voting agencies in advance.

According to industry sources, what used to be a mere formality in the past has recently transformed into a battleground where core management issues such as the appointment of directors and auditors and amendments to articles of incorporation are decided. In particular, this year is characterized by a complex risk structure, with activist funds, private equity funds (PEFs), and alliances of minority shareholders acting simultaneously and in coordination.

The market's sense of urgency is already becoming reality. Palisade Capital, a UK-based activist fund holding shares in LG Chem, has announced plans to rally shareholders ahead of this year's meeting, while Align Partners is also conducting shareholder campaigns targeting multiple listed companies, including STIC Investments and Coway. In addition, general shareholders are now participating in an organized manner through minority shareholder platforms such as 'ACT' and 'HeyHolder', exposing companies to all-around pressure.

The problem is that there is a severe shortage of professional infrastructure to defend against these shareholder meeting risks. Proxy voting work requires a high level of expertise, from analyzing shareholder registers and identifying key issues for each agenda item, to developing persuasion strategies, securing proxies, and responding on-site at the meeting. However, due to limitations in manpower and time, each agency can only handle a limited number of projects simultaneously.

As the meeting season draws closer, specialized agencies with top-tier personnel are likely to fill their contracts early. There are concerns that companies that start preparations late may have to rely on inexperienced personnel or may not be able to secure outside support at all, facing the worst-case scenario of a 'failed shareholders' meeting.'

A representative from Locomotive, a proxy voting and shareholder relations (SR) specialist, warned, "The recent trend in shareholders' meetings goes beyond simply gathering votes; it has become a full-scale battle to develop arguments against hostile shareholder proposals and systematically defend friendly stakes. When the meeting is imminent, both strategy formulation and execution inevitably face physical limitations."

The representative added, "Although inquiries have surged recently, the resources available to proxy agencies are limited. Since responding to shareholders' meetings is a long-term project that must begin at least several months in advance, bringing forward the timing of partner selection will be the first step in managing this year's meeting risks."

In particular, the representative said, "With the implementation of the 'Stewardship Code Enhancement Plan'-the proxy voting guideline for the National Pension Service and institutional investors-monitoring procedures and disclosures have been greatly strengthened. As a result, there is a growing need to move beyond the formalities of past shareholders' meetings and, through ongoing shareholder relations, communicate with shareholders and strengthen relationships on a regular basis."

Experts believe that this March's shareholders' meetings will be a watershed moment in determining companies' crisis response capabilities. Only companies that recognize proxy voting as an essential risk management infrastructure, rather than a mere cost, and proactively secure partners, will be able to weather the waves of management control disputes.