Seoul: Only six percent of 171 listed companies on South Korea's main stock exchange have adopted cumulative voting, a system aimed at enhancing shareholder rights, according to a report released Wednesday by a local research institute.

According to Yonhap News Agency, Happy ESG, a corporate governance research group, analyzed the governance structures of 171 companies among the top 250 by market capitalization. These firms voluntarily submitted corporate governance reports to the Korea Exchange (KRX) last year, evaluating their compliance with 15 key indicators aimed at improving governance practices.

The KRX introduced the corporate governance report system in 2017, and starting next year, submission of the report will become mandatory. Cumulative voting is a method often used in board elections, where shareholders receive a number of votes equal to the number of shares they own multiplied by the number of directors being elected.

For instance, if a shareholder owns 100 shares and three directors are up for election, the shareholder has 300 votes. These votes can be given entirely to one candidate or split among multiple candidates (e.g., 50, 100, and 150).

As for overall compliance with the 15 governance indicators, 69.8 percent of the 171 companies met the standards in 2024, up from 63.5 percent the previous year, according to Happy ESG. Notably, major steelmaker POSCO Holdings and leading tobacco manufacturer KT and G Corp. met all 15 requirements for the second year in a row.