SOUTH KOREA Law and Practice Contributed by: Ki Wook Kang, Kyung Chun Kim, Junghae Kang and Do Kyeom Kim, Lee & Ko
brought by minority or activist shareholders during the period between the first public notice of the deal and the date of the general shareholders’ meeting. 10.3 “Broken-Deal” Disputes In Korea, as in other jurisdictions, deals can frequently fall through for a variety of reasons. There is no general rule of law or established case law on how such cases should be handled under Korean law. While such bro - ken deals do not necessarily lead to a dispute, one of the few noteworthy broken-deal disputes is a dispute between HDC Hyundai Development Company (HDC) and Asiana Airlines. In late 2019, HDC Hyundai Indus - trial Development Company announced its intention to acquire Asiana Airlines with an earnest money deposit of KRW250 billion, but the deal fell through in Septem - ber 2020. In November 2020, Asiana Airlines initiated litigation against HDC, requesting an order mandating issuance of a notice of termination of pledge to per - mit withdrawal of the deposit previously received, and seeking damages. A court ruling was made in 2022 that Asiana Airlines was not obligated to return the earnest money deposit. In March 2025, the Supreme Court dismissed the appeal, thereby finally affirming judgment in favour of Asiana Airlines. Conventionally, shareholder activism has not been active in Korea, but it is showing signs of becoming more active recently. In 2015, Elliott Management engaged in shareholder activism against the merger of Samsung C&T and Cheil Industries. In 2018, KCGI, the domestic activist fund, became the second-larg - est shareholder by acquiring Hanjin Kal, the largest shareholder of Korean Air, and Hanjin, its subsidiary, to improve the corporate governance structure, estab - lish a shareholders’ council composed of the majority shareholders and general shareholders, sell off insol - vent business, improve management efficiency and strengthen risk management. Other than KCGI, mul - tiple activist funds have been founded since 2018 and have tried to influence the management of companies by various means, such as delivering public letters and pro-actively exercising shareholder rights includ - ing voting rights in shareholders’ meetings. 11. Activism 11.1 Shareholder Activism
In 2022, companies such as SM Entertainment and Osstem Implant have recently been targeted by activ - ist funds, leading to disputes over the management control of such companies. Notably, activist interventions at SM Entertainment yielded some success, including a change in the com - position of the board of directors (see 11.2 Aims of Activists ). The number of domestic companies targeted by activ - ist funds was 66 in 2024 and 77 in 2023. This is a sig - nificant increase from 10 in 2020 and 27 in 2021. With the emergence of platforms capable of mobilising minority shareholders and the multiple amendments to the Korean Commercial Code in 2025 which aimed to strengthen the shareholder rights, the number of companies becoming targets of shareholder activism is expected to increase even more. Requests made by activist funds include demands to increase dividends, improve corporate governance, conduct share revaluation and dispose of non-core businesses or assets. Lately, ESG has been an impor - tant factor in corporate evaluation in Korea, and we expect shareholder activism related to corporate gov - ernance to increase. The National Pension Service, which owns a large number of shares (but typically less than 10%) in a number of domestic listed companies, is also actively exercising shareholder rights by introducing a stew - ardship code in July 2018. Other institutional investors, including pension funds, asset management firms, securities companies and PEFs, have also adopted stewardship codes. As of December 2025, a total of 249 institutions were found to have implemented stewardship codes. This is a significant increase from the 137 in 2020 and 181 in 2021. 11.2 Aims of Activists A representative example of a company that recently became a target of shareholder activism is SM Enter - tainment. Align Partners, a local activist fund, raised issues about the unfairness of a contract between SM Entertainment and a company owned by Soo-Man Lee, the founder and the former largest shareholder. Align Partners went on further to submit a shareholder
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