SOUTH KOREA Trends and Developments Contributed by: Joo-Young Kim, Hyun-Ju Ku and Dong-Wook Kim, Hannuri Law
Hannuri Law LLC Suite #431 27 Seochojungang-Ro 24-Gil Seocho-Gu Seoul South Korea Tel: +82-2-537-9500 Fax: +82-2-564-9889 Email: hnr@hnrlaw.co.kr Web: en.hnrlaw.co.kr
Controversies around cumulative voting Prior to the recent amendment of the Commercial Act, companies could exclude cumulative voting in their articles of incorporation (Article 382-2), and in practice, most listed companies chose to opt out. Among those that did adopt cumulative voting, its use has been infrequent due to additional procedural requirements. In the last decade, only three companies – KT&G, JB Financial Group, and Korea Zinc – have conducted cumulative voting during director elections. Recent Korean shareholder campaigns that seek to elect directors frequently: • precede the election item with a proposal to intro- duce cumulative voting; or • target companies that already allow it. For example, at Coway’s 2025 AGM, shareholders proposed an amendment to the articles of incorpora- tion to adopt cumulative voting. Companies traditionally have coped with such pres- sure by weakening the practical effect of cumulative voting – for example, by: • setting a prior agenda item that reduces the num- ber of directors to be elected; • separating elections by director class (inside, out- side/independent, and other directors who are not engaged in regular business) through amendments
Analysis of the 2025 General Shareholder Meetings in South Korea Continued shareholder activism targeting treasury shares retirement Under the Commercial Act, while methods of acquiring treasury shares are constrained, boards have broad discretion on their disposal (Article 343). In practice, management has often used treasury shares to defend corporate control – for example, by transferring them to friendly shareholders – rather than as a mechanism for shareholder returns. Against this backdrop, Korean investors are increasingly exercising their shareholder rights to press for the retirement of treasury shares. Until now, Korean investors have not been largely suc- cessful. A recent ruling by a civil division of the Seoul Central District Court, in an injunction proceeding, rejected a shareholder proposal seeking retirement on the ground that retiring treasury shares fall within the board’s purview and are therefore not an appropri- ate subject of a shareholder proposal (Seoul Central District Court 2025KaHap20194). However, the government and ruling party have announced their intention to amend the Commercial Act to mandate retirement of treasury shares, mak- ing regulatory developments worth close monitoring. Some listed companies have already responded – for instance, by issuing exchangeable bonds that desig- nate treasury shares as the underlying exchange asset – anticipating a change toward mandatory retirement.
to the articles of incorporation; • effectively staggering terms; or
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