"Active Shareholder Actions Increased This General Meeting Season... Activist Funds Highlighted"

On the 26th, shareholders attended the '44th Kumho Petrochemical Annual General Meeting' held at Kumho Petrochemical in Jung-gu, Seoul. The photo and article content are unrelated. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Myung-hwan Lee] As the 2021 fiscal year shareholder meeting season has come to a close, securities industry analysis shows that active shareholder proposals have increased compared to previous years. Companies are also evaluated to have responded accordingly.

According to Shinhan Investment Corp. on the 23rd, at shareholder meetings held last month for companies such as SK Chemicals, Kumho Petrochemical, and SM Entertainment, shareholders including activist funds actively made shareholder proposals.

At SK Chemicals' shareholder meeting, Anda Asset Management proposed ▲opposition to the approval of director appointments and remuneration limits ▲dividend expansion ▲introduction of cumulative voting. Overseas investors also proposed shareholder returns after selling their stakes in SK Bioscience. In response, SK Chemicals announced a voluntary acquisition trust agreement, but some shareholder proposal items were rejected. SK Chemicals' stock price rose about 14.2% from two weeks before the meeting to the post-meeting peak. There is also an evaluation that further responses from SK Chemicals to meet shareholder demands can be expected.

At SM's shareholder meeting, activist fund Align Partners was active. Align Partners made shareholder proposals against SM and succeeded in appointing new audit committee members. During this process, Align Partners also appealed for active participation from minority shareholders. SM management achieved a statement regarding the controversy over its subsidiary 'Like Planning' and also achieved the first dividend since listing. SM's stock rose 2.5% on the day of the meeting.

Researcher Suhyun Kim of Shinhan Investment Corp. said, "Domestic funds also actively made shareholder proposals this shareholder meeting season," and evaluated, "Align Partners, which succeeded in active shareholder proposals at SM, and the ESG division of Anda Asset Management, which made proposals to SK Chemicals, will become representative shareholder activist funds."

Meanwhile, the Korea Corporate Governance Service (KGCS) reported that in the first quarter shareholder meetings this year, out of a total of 2,604 agenda items, it recommended voting against 452 items, accounting for 17.4%. Examining the reasons for opposition to outside director appointments, the composition is ▲independence impairment due to conflicts of interest, etc. (54%) ▲legal disqualification and concerns about diligence (11%) ▲long-term reappointment (7%) ▲lack of expertise (3%) , among others. In particular, the proportion of opposition reasons due to independence impairment from conflicts of interest has significantly increased compared to the previous period.

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