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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] Hyosung Heavy Industries failed to pass a proposal to reduce the size of its board at its annual general meeting, after opposition from the National Pension Service (NPS).
According to industry sources on March 19, the proposed amendment to the company’s articles of incorporation—seeking to reduce the number of directors from 3–16 to 3–9—was rejected at the shareholders’ meeting held in Mapo, Seoul. The proposal also included stricter qualification requirements for directors and more flexible terms of office.
The move had been widely viewed as a preemptive measure ahead of revisions to Korea’s Commercial Act, set to take effect later this year, which will expand the use of cumulative voting. Under the new rules, a larger board size increases the likelihood of minority shareholder-backed candidates gaining board seats.
As a result, some companies have sought to reduce board size or adjust director terms prior to the implementation, a strategy seen as aimed at defending controlling shareholders’ influence.
The NPS voted against the proposal, citing concerns over shareholder rights. The pension fund stated that reducing the board size cap through the articles of incorporation could weaken the ability of minority shareholders to submit proposals and exercise cumulative voting rights, while noting that the company could maintain an appropriate board size without such changes.
It also warned that stricter qualification requirements could limit the appointment of directors with diverse expertise, and opposed provisions allowing flexible adjustments to the terms of outside directors without clear justification.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
