[Shareholder Capitalism] ①The Era of the Amended Commercial Act Begins...What's the Keyword for March Shareholders' Meetings?

Increase in Corporate Governance and Articles of Incorporation Amendments
Voting Battles Over Audit Committee Appointments Under the '3% Rule'
Rising Activity from Activists and Minority Shareholders
National Pension Service: "Active Exerci

Editor's NoteWith the advent of the revised Commercial Act, the Korean capital market is reaching a new turning point marked by 'shareholder capitalism.' The institutional changes brought about by the new law are expected to have a significant impact on corporate governance and overall capital market practices. In a five-part series, we examine the changes brought by the amended Commercial Act, the responses to those changes, and the institutional tasks required for the establishment of shareholder capitalism in the future.

①The Era of the Revised Commercial Act Has Begun…What Are the Keywords for March Shareholder Meetings?
②"This Is the Last Chance"…Companies Go All Out to Defend Control in Response to the Revised Commercial Act
③'Anti-Stock Price Suppression Act' in Full Swing…Experts Say the Key Is Reforming Inheritance and Gift Taxes
④"In the End, Institutions Must Act"—The Reality of the Stewardship Code
⑤The Final Puzzle Is the Disclosure System…"Result-Only Disclosures That Exclude Shareholders Must Be Overhauled"

The regular March shareholders’ meeting season, which will serve as a testbed for 'corporate governance changes', has officially begun. This marks the first shareholders’ meeting since the revised Commercial Act, which focuses on strengthening 'shareholder rights' and 'shareholder returns', passed the National Assembly. Numerous proposals to amend articles of incorporation reflecting the three-stage legislative process have been submitted, and as shareholder proposals have also surged, it is clear that companies, activist investors, and minority shareholders are all responding strategically.

According to the Korea Securities Depository and others on March 16, out of 2,727 listed companies closing their accounts in December 2025, 211 companies, including Samsung Electronics (on the 18th), are scheduled to hold their regular shareholders’ meetings this week, which is the third week of March. Next week, more than 1,000 companies—including Korea Zinc (on the 24th), which is currently embroiled in a management rights dispute—are expected to hold their annual meetings.

The market sees this shareholders’ meeting season as a proving ground for the revised Commercial Act. Sustinvvest, an ESG (environmental, social, and governance) rating agency, stated in a report, "This is the first year in which the practical application of the Commercial Act amendments will be thoroughly examined," adding, "This is an important turning point where companies, shareholders, and institutional investors must all consider their response strategies." Namwoo Lee, Chairman of the Korea Corporate Governance Forum, commented, "Controlling shareholders may try to preemptively submit proposals to secure an advantageous position, while general shareholders and institutional investors may unite in response, leading to a showdown at the ballot box. It is expected to be a heated shareholders’ meeting season."

The revised Commercial Act, which passed the National Assembly in three stages starting last year, centers on the mandatory adoption of cumulative voting, reinforcing the so-called '3% rule' that limits the voting rights of the largest shareholder and their related parties to 3% when appointing audit committee members, and the introduction of electronic shareholder meetings. Except for a few provisions, such as the expanded fiduciary duty of directors, which took effect immediately, most changes are scheduled to take effect from the second half of this year.

Companies Amending Articles of Incorporation…Moves to Restructure Corporate Governance

A look at this year’s shareholders’ meeting agendas reveals a noticeable increase in proposals to amend articles of incorporation relating to corporate governance. Major conglomerates such as Samsung Electronics and SK hynix have submitted proposals to remove clauses excluding cumulative voting from their articles of incorporation in accordance with the revised Commercial Act. The cumulative voting system allows shareholders to concentrate their voting rights on specific candidates, thereby increasing the influence of minority shareholders on the board.

At the same time, there are visible moves by companies to secure management stability by adjusting the size of the board of directors or the term lengths of directors. For example, Hanwha Group affiliates have simultaneously submitted proposals to extend director terms from "within 2 years" to "3 years or within 3 years." Hyosung Group affiliates are pushing to reduce the upper limit on the number of directors from 16 to 7–9, while Celltrion plans to reduce its board from 15 to 9 members.

This year’s shareholders’ meetings also show a trend of companies preemptively appointing audit committee members to prevent a reduction in the influence of major shareholders. With the '3% rule' of the revised Commercial Act limiting the voting rights of the largest shareholder, there is a greater likelihood that audit committee members representing minority shareholders will serve as a check on the board. The key issue at the Korea Zinc shareholders’ meeting scheduled for the 24th is also the amendment of the articles of incorporation regarding the separate election of audit committee members.

Seungjae Oh, Co-CEO of Sustinvvest, commented, "This year’s shareholders’ meetings will feature highly sensitive discussions on utilizing the new ‘business purpose’ clause to hold treasury shares, as well as proposals to change the number and term lengths of directors using cumulative voting." Yoonjung Kim, an analyst at LS Securities, noted, "This is the first regular shareholders’ meeting reflecting the revised Commercial Act," highlighting as key points: ▲amendments to articles of incorporation, ▲approval of plans for holding or disposing of treasury shares, and ▲capital reduction (capital decrease) proposals related to treasury share cancellation and reduced dividend payouts. She added, "A battle of wits is expected between companies and shareholders over securing exceptions to the mandatory cancellation of treasury shares."

Shareholder Proposals Surge, Leveraging the ‘Revised Commercial Act’

Empowered by the revised Commercial Act, minority shareholders and activist funds have become increasingly assertive in their shareholder activism. Their goals have gone beyond demanding the appointment of independent directors and auditors or increased dividends; they are now aiming to participate in corporate decision-making by expanding their presence on boards.

The UK-based hedge fund Palliser Capital has submitted a shareholder proposal to LG Chem, calling for the repurchase and cancellation of treasury shares and the appointment of independent directors. The domestic activist fund Align Partners has also urged DB Insurance to establish a profitability-oriented management strategy and to refine its shareholder return policy. Truston Asset Management has called on KCC to liquidate its stake in Samsung C&T and cancel treasury shares. In the case of Taekwang, it proposed that all minority shareholders sell their shares and voluntarily delist the company.

Minority shareholders have also taken collective action. At DB HiTek, they called for the appointment of a special auditor to investigate internal transactions, while at Shinpoong Pharm, they demanded a cash dividend based on recovered embezzlement funds and a reduction in executive compensation. ACT, a minority shareholder platform that sent proposals to 17 companies in total, emphasized, "This year’s three core demands are the appointment of independent monitors, normalization of director compensation limits, and the codification of shareholder communication and rights."

In addition, the responsibility of institutional investors to exercise their voting rights is becoming more pronounced. The National Pension Service Fund Management Headquarters has announced, "Starting with this year’s shareholders’ meetings, we will actively exercise our voting rights to reflect the intent of the revised Commercial Act." It has also pledged to block any proposals that do not align with the spirit of the amendments and to expand disclosure targets to include companies in which it holds a stake of 5% or more, thereby enhancing transparency in the exercise of voting rights.

Both inside and outside the market, there is considerable interest in whether the changes brought by the revised Commercial Act will lead to the resolution of the 'Korea Discount' (the undervaluation of the Korean stock market). The Yulchon Corporate Governance Center (YCGC) commented, "With the Commercial Act amendments and the strengthening of stewardship codes (guidelines for institutional investor voting), we are entering a more dynamic environment than ever before. This will be a structural transformation toward resolving the Korea Discount." However, there are also voices in the business community arguing that, as companies intensify their shareholder return efforts, legislative measures to ease corporate regulations and guarantee means of defending management rights should also be pursued. An industry representative argued, "For the smooth landing of the revised Commercial Act, supplementary legislation is needed to ensure that corporate management autonomy is not undermined."

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