SOUTH KOREA Trends and Developments Contributed by: Joo-Young Kim, Hyun-Ju Ku and Dong-Wook Kim, Hannuri Law
• convening a sudden extraordinary general meeting to fill seats up to the cap. As of 25 August 2025, legislation was passed to make cumulative voting mandatory for large listed compa- nies (those with total assets of at least KRW2 trillion) – a change expected to spur more attempts to elect directors via cumulative voting. However, many practi- cal uncertainties persist, primarily due to the absence of detailed statutes or regulatory guidance beyond the Commercial Act. Questions remain about whether companies can split agenda items by director class and conduct separate cumulative votes, if the “3% Rule” applies under the “implementation rules” in the articles, and whether cumulative voting is applicable when shareholders elect audit committee members separately. Growing importance of the reciprocity rule as a control-defence tool Korea restricts voting rights for reciprocal sharehold- ings (Article 369 (3)): if a parent and subsidiary collec- tively hold over 10% of another company’s outstand- ing shares, that other company’s shares in the parent are treated as “reciprocal holdings” and lose voting rights. Historically, companies used such cross-hold- ings to secure friendly votes, and activist funds have challenged that practice. In the JB Financial Group campaign, for instance, Align Partners Capital Man- agement argued that the company formed “reciprocal holdings” via an investment partnership and obtained an injunction blocking the friendly stake’s voting rights. In the 2025 Korea Zinc control dispute case, the company actively created reciprocal holdings with its opponent to block the opponent’s votes. The Supreme Court had previously determined that, when recipro- cal holdings are established after the record date, the evaluation of whether the statutory conditions are met should be based on the date of the general share- holders’ meeting. However, in the Korea Zinc case, the company’s subsidiary acquired more than 10% of Young Poong shares shortly before the meeting. This move appeared to be an attempt to trigger the reciprocity rule and remove voting rights from the opposing side. Young Poong, for its part, had trans- ferred its Korea Zinc shares to a subsidiary that would not face reciprocal-holding voting restrictions, raising
the question whether the reciprocity test for the vot- ing company (Young Poong) should be measured on the shareholders’ meeting date rather than the record date. Seoul Central District Court held that whether the other company exercising voting rights holds recip- rocal shares must be assessed as of the record date, not the meeting date (Seoul Central District Court 2025KaHap20144; 2025KaHap20431). Young Poong appealed and the decision is not yet final. With tighter regulation of treasury shares, the restric- tion on voting rights for reciprocal shareholdings is poised to gain importance as a control-defence tool, and activists will likely devote more attention to reci- procity-related tactics. Progress in activist campaigns opposing corporate group restructurings Doosan Group announced a business group restruc- turing under which Doosan Bobcat, a core subsidi- ary of Doosan Enerbility, would become a wholly owned subsidiary of group affiliate Doosan Robotics through a spin-off/merger and a comprehensive share exchange. In short, Doosan Enerbility and Doosan Bobcat shareholders were to swap their shares for Doosan Robotics shares at pre-set ratios. Investors objected that the exchange ratios were undu- ly favourable to Doosan Robotics, where the control- ling shareholder, Doosan, exercises greater influence. Align Partners Capital Management then commenced a campaign urging shareholders to vote against the board’s restructuring plan. Also noting problems, the Financial Supervisory Service requested correction of the securities registration statement multiple times. Finally, Doosan withdrew the plan shortly before the shareholders’ meeting, facing the risk of heavy cash outflows from appraisal rights. This case underscored the practical importance of the securities registration statement. Now, boards that disclose restructuring plans face more concrete demands from regulators and investors to disclose board’s review process and the specifics of any expected synergies.
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