The 'Super Shareholders' Meeting Week' Arrives in the Last Week of March

Major Companies to Hold General Meetings from March 25-29
Samsung Electronics, Korea & Company, POSCO in Focus
Activism by Hedge Funds Also Intensifies

As February, the month when listed companies notify shareholders of the general meeting date, approaches in just one day, the business community's attention is focused on the 'shareholders' meeting season.' This year's general meetings are expected to address key agenda items such as the reappointment of group chairpersons as registered directors, enhancing shareholder value, and improving corporate governance.

According to the business community on the 30th, major companies are considering holding their shareholders' meetings in March as in previous years. Considering that previous meetings were held around March 20, it is highly likely that March 25-29 will become the 'super week' for shareholders' meetings this time.

Chairpersons' 'Judicial Risks,' Key Points to Watch at Shareholders' Meetings

There is a forecast that several corporate chairpersons carrying 'judicial risk' issues this year may become variables at the shareholders' meetings. Samsung Electronics is drawing attention to whether Chairman Lee Jae-yong will return as a registered director. Although he leads the group as the chairperson, he has maintained an unregistered director status. He was detained and indicted in December 2017 over the political scandal and stepped down from his registered director position when his term expired on October 26, 2019. Subsequently, due to employment restrictions under the Act on the Aggravated Punishment of Specific Economic Crimes, he was barred from being a registered director for five years. However, he was reinstated by a special pardon on August 15, 2022, Liberation Day, making reappointment possible. Since then, the business community has repeatedly raised the necessity of his return as a registered director. On November 1, 2022, many expected his promotion to chairman and reappointment, but it did not materialize.

Key Points of March Shareholders' Meetings by Company. Table by Lee Jin-kyung

The calls have recently grown louder. The semiconductor performance fell short of expectations last year due to the global economic downturn, creating a sense of urgency to change the atmosphere this year, and the group's circumstances have increased the role of Chairman Lee. The business community expects that if Chairman Lee becomes a registered director again, he will publicly demonstrate his commitment to 'responsible management' and gain opportunities to express opinions on group issues at board meetings, accelerating the management path he envisions. The first trial verdict on the 'unfair merger of Samsung C&T and Cheil Industries and the accounting fraud of Samsung Biologics,' scheduled for the 5th of next month, is expected to be a gauge.

At this shareholders' meeting, Korea & Company is expected to provide an answer regarding the reappointment of Chairman Cho Hyun-bum as an inside director. If Chairman Cho is reappointed, he can further solidify his sole management system. He maintained control after the public tender offer by Korea & Company's owner, eldest son Cho Hyun-sik, and private equity firm MBK Partners failed. However, the first trial at the Seoul Central District Court on allegations of unfair support and embezzlement/breach of trust involving affiliates could affect his position. The next trial is scheduled for the 1st of next month.

POSCO's New Chairman Election and OCI's Integration Turning Point

POSCO Group will finalize the selection of a new chairman at this shareholders' meeting. Currently, POSCO Group is in the process of selecting a successor to Chairman Choi Jeong-woo, having shortlisted up to 12 candidates after receiving internal and external recommendations. The candidate recommendation committee, composed of seven outside directors including Chairman Park Hee-jae, further narrowed down the candidates by reflecting the evaluation results from a separate independent organization, the 'CEO Candidate Recommendation Advisory Group,' which includes five experts from industry, law, and academia. Although the individuals on the 'short list' have not been disclosed, internal candidates mentioned include Kim Hak-dong, Vice Chairman of POSCO and a key figure in the group; Jung Tak, Vice Chairman of POSCO International; and Jung Ki-seop, President of POSCO Holdings and a finance expert. External candidates include former LG Energy Solution Vice Chairman Kwon Young-soo, former Minister of Knowledge Economy Choi Joong-kyung, and former Minister of Trade, Industry and Energy Yoon Sang-jik. The recommendation committee will hold a meeting on the 31st to announce the list of five 'finalists' for in-depth interviews. Subsequently, through intensive face-to-face evaluations, one candidate will be selected as the final chairman nominee in February, and the agenda will be submitted to the board for resolution and shareholder approval at the regular shareholders' meeting in March.

OCI, which recently announced integration with Hanmi Pharmaceutical Group, faces a crossroads during this shareholders' meeting season. OCI Group and Hanmi Pharmaceutical Group announced their integration on the 12th through a capital contribution in kind and new share issuance. Subsequently, the late founder Lim Seong-gi's eldest and second sons, Lim Jong-yoon and Lim Jong-hoon, presidents of Hanmi Pharmaceutical, opposed the integration and filed an injunction to prohibit new share issuance, halting integration discussions. If the injunction is accepted on the 7th of next month, Hanmi Science will be unable to issue new shares, potentially causing friction in the integration between the two companies. At Hanmi Pharmaceutical Group's shareholders' meeting in March, a vote battle related to the integration may occur. The combined shareholding of Lim Jong-yoon and Jong-hoon's wives, children, and companies owned by Lim Jong-yoon such as DXVX amounts to 28.4%. Chairman Song's special affiliates, including Gahyeon Cultural Foundation (4.9%) and Lim Seong-gi Foundation (3%), hold a combined 35.01% stake.

On March 31 last year, shareholders entered the KT shareholders' meeting held at the KT Research and Development Center in Seocho-gu, Seoul. Photo by Dongju Yoon doso7@

Electronic Voting and Activist Funds Expand Shareholders' Voices

Electronic voting, introduced by many companies since March 2020 amid the spread of COVID-19, is expected to continue serving as a means for shareholders to express their voices this year.

Activist hedge funds have also recently intensified their activities, raising the atmosphere. The number of activist hedge funds has gradually increased over the past year. Many companies are expected to be influenced by activist funds at this year's shareholders' meetings. The weapon of activist funds is the shareholder proposal right. This right allows shareholders to request the submission of agenda items at the meeting, and for listed companies, it can be exercised by holding at least 1% of shares (or 0.5% if the capital exceeds 100 billion KRW). Shareholder proposals must be submitted to the company six weeks before the meeting. Tax expert Baek Yoo-seok of Fineus Tax & Consulting stated, "Activist funds have clear pros and cons, so it remains to be seen whether they will help corporate growth or become a nuisance to minority shareholders. If they prioritize short-term profitability such as cost-cutting or high dividends over long-term corporate growth, they could cause significant turmoil in our capital market."

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