Three Key Points to Watch on Super Shareholders' Meeting Day: '3% Rule, ESG, Young Heirs'

Intensified Management Disputes at Kumho Petrochemical and Hankook Tire Due to 3% Rule
ESG (Environmental, Social, Governance) Management Also a Major Trend

[Asia Economy Reporters Changhwan Lee, Sojeong Seo] The regular general shareholders' meeting, held to conclude the year, is an important event that presents management performance reports and future visions to shareholders. Changes to business objectives and articles of incorporation, as well as the board of directors that will lead the company, are finalized through the regular shareholders' meeting.

Especially this year, with the revised Commercial Act applied for the first time and many companies preparing for the post-COVID-19 era, interest in the shareholders' meetings was higher than ever. The key points of this year's meetings can be summarized as intensified management disputes due to the introduction of the 3% rule, strengthening of ESG (Environmental, Social, and Governance), and the advancement of younger heirs to leadership positions.

Intensified Management Disputes Due to Introduction of the 3% Rule

The biggest issue on the 26th, the "Super Shareholders' Meeting Day" when about 500 listed companies hold their meetings simultaneously, was the intensification of management disputes due to the introduction of the 3% rule. The 3% rule, introduced this year under the revised Commercial Act, requires the separate election of audit committee members from other directors and limits the voting rights of major shareholders to 3% in this process. Because the major shareholders' voting rights are limited to 3%, other shareholders can exert significant influence in appointing audit committee members.

Kumho Petrochemical is a representative company where management disputes have intensified due to the 3% rule. Executive Director Park Cheol-wan is currently in conflict with his uncle, Chairman Park Chan-gu, over director appointments. Both sides fiercely contested each agenda item at the shareholders' meeting. The meeting, scheduled for 9 a.m., was delayed by more than two hours due to the time-consuming proxy verification process.

Kumho Tire's holding company, Kumho & Company, is also a company where management disputes have intensified due to the 3% rule. At the shareholders' meeting scheduled for the 30th, Vice Chairman Cho Hyun-sik (holding 19.32%) and President Cho Hyun-beom (holding 42.90%), the eldest and second sons of Chairman Cho Yang-rae, will compete in a vote for the appointment of outside directors as audit committee members. Vice Chairman Cho Hyun-sik has recently been actively securing friendly shares.

Strengthening ESG and Advancing Younger Heirs Also Key Issues

Another key point is that major companies are strengthening ESG management without exception. ESG is a concept that enhances corporate social contribution, social responsibility, and sustainable management, meaning that non-financial performance such as environmental and social impact and transparent management are considered important alongside financial conditions in management and investment decisions.

LG Group will establish an 'ESG Committee,' the highest deliberative body for ESG management within the board of directors, in all its listed affiliates by the end of this year. The committee will review major policies such as environment, safety, and customer value and report to the board. LG Group Chairman Koo Kwang-mo said at the shareholders' meeting held that day, "Through establishing an ESG management system, we will strive to become a sustainable LG that earns trust and love from various stakeholders."

SK Group is also proactive in ESG management. SK announced the day before that it will establish a Personnel Committee and an ESG Committee under the board of directors, entrusting them with key management activities such as recommending CEO and outside director candidates, evaluating the CEO, reviewing internal director compensation, and examining mid- to long-term growth strategies. Samsung Electronics has also installed and operates a 'Governance Committee' within the board and upgraded its existing Sustainability Management Office to a Sustainability Management Promotion Center directly under the CEO.

This year's shareholders' meetings also saw younger heirs stepping forward to take the lead in management. Honorary Chairman Chung Mong-koo of Hyundai Motor Group completely stepped down from group management by resigning as a registered director at the Hyundai Mobis shareholders' meeting held on the 24th. With Honorary Chairman Chung stepping down, Chairman Chung Eui-sun's leadership has been further strengthened.

Shin Chun-ho, founder of Nongshim, also retired. Nongshim did not reappoint Shin Chun-ho as an internal director at the shareholders' meeting held the day before. Shin's eldest son, Vice Chairman Shin Dong-won, is expected to become the next chairman of Nongshim.

At Celltrion's shareholders' meeting, the eldest and second sons of Honorary Chairman Seo Jung-jin joined the board of directors, drawing attention. Seo's eldest son, Senior Vice President Seo Jin-seok, was appointed as a registered executive of Celltrion and Celltrion Pharm.

This content was produced with the assistance of AI translation services.