As the regular shareholders' meeting season for listed companies approaches, there are many inquiries about the shareholders' legitimate right to 'shareholder proposal rights'. Shareholder proposals are a powerful means to monitor management and enhance shareholder value, but the legal requirements are strict, and if the timing and format are missed, it is often the case that proposals cannot even be made.

[Table of Contents]

1. Requirements for exercising shareholder proposal rights for listed companies: Holding shares and duration

2. The key to shareholder proposals, compliance with the '6 weeks prior' written notification deadline

3. Reasons for a company's rejection of shareholder proposals and the burden of proof

4. Legal solutions for unjust rejections: Proposal submission injunction

5. Consultation guide for protecting shareholder rights from the law firm Cheongchul

1. Requirements for exercising shareholder proposal rights for listed companies: Holding shares and duration

Being a shareholder of a listed company does not mean that anyone can immediately exercise shareholder proposal rights. According to the Commercial Act, the following requirements must be met to make a shareholder proposal for a listed company.

• Holding period: The relevant shares must be held for at least 6 months continuously.

• Holding shares: Must hold at least 1% of the total issued shares, and if it is a large listed company with a capital of 100 billion won or more, a holding of just 0.5% or more is enough to make a proposal.

2. The key to shareholder proposals, compliance with the '6 weeks prior' written notification deadline

The 'timing' of the shareholder proposal is the most important factor that determines the outcome. A shareholder wishing to exercise the shareholder proposal rights must notify the company in writing at least 6 weeks prior to the date of the shareholders' meeting. If this legal deadline is missed by even one day, the company can lawfully refuse the item to be included on the agenda, so it is essential to thoroughly check the schedule in advance.

3. Reasons for a company's rejection of shareholder proposals and the burden of proof

A company cannot simply reject a shareholder proposal because it does not like the item. According to the Commercial Act, rejection is possible under the following circumstances.

• If the content of the item violates laws or the articles of incorporation

• If there is a clear concern that it will cause significant harm to the company. An important point is that the burden of proof for the reason for rejection lies with the company, and recent precedents are increasingly protecting shareholder proposals with the formal requirements met. Therefore, before the validity of the content, it is a priority to perfectly meet the requirements of 'form and deadline'.

4. Legal solutions for unjust rejection: Proposal submission injunction

If a shareholder proposes legitimately and the company unjustly rejects the item from being included on the agenda, legal action must be taken to reclaim rights.

• Solution: You can apply to the court for a 'proposal submission injunction' before the shareholders' meeting is held.

• Note: Once the shareholders' meeting has already taken place, there is no practical benefit. Therefore, it is crucial to quickly review the requirements before the shareholders' meeting to ensure that the golden time is not missed and to proceed.

Shareholder proposal rights are a precious right of shareholders, but complex commercial law regulations and strict compliance with deadlines are required. The law firm Cheongchul provides the optimal legal strategy to ensure that the legitimate voices of shareholders are conveyed to the shareholders' meeting, based on extensive practical experience in corporate governance and exercising shareholder rights.

If you need rapid legal measures such as proposal submission injunctions or need to review the requirements for shareholder proposals, please contact the law firm Cheongchul. Professional lawyers will conduct a thorough consultation to protect your rights.