SOUTH KOREA Law and Practice Contributed by: Ki Wook Kang, Kyung Chun Kim, Junghae Kang and Do Kyeom Kim, Lee & Ko
proposal and filed a shareholder derivative lawsuit. As a result, the then-current management withdrew its support for Soo-Man Lee. In support of Soo-Man Lee, HYBE, one of the largest entertainment companies in Korea, purchased 18.5% of SM Entertainment’s shares from Soo-Man Lee and launched a tender offer to acquire additional shares in SM Entertain - ment. After the announcement of the tender offer by HYBE, Kakao Entertainment, another large entertain - ment company, announced that they would interlope and launch a competing tender offer at a higher price to gain control of SM Entertainment, which was sup - ported by Align Partners. This dispute to control the management of SM Entertainment and the series of competing tender offers attracted a great deal of pub - lic and media attention, as the ultimate acquirer of SM Entertainment would likely have a significant impact on the entertainment industry’s future. On 12 March 2023, HYBE announced that it would renounce its ten - der offer to acquire control of the management of SM Entertainment, bringing the dispute between the two entertainment giants to a close. In 2025, a notable dispute arose between Taekwang Industrial and Truston Asset Management concerning the issuance of exchangeable bonds. Truston Asset Management had actively engaged as a major share - holder of Taekwang Industrial since 2021. On 27 June 2025, Taekwang Industrial disclosed a plan to issue exchangeable bonds exchangeable into all treasury shares held by the company. Truston Asset Manage - ment filed applications for a preliminary injunction to suspend directors’ unlawful acts and to prohibit the issuance of the exchangeable bonds, arguing that the exercise of exchange rights over treasury shares amounting to 24.41% could undermine shareholder value; however, the applications were dismissed. Sub - sequently, on 24 November 2025, Taekwang Industrial withdrew the plan to issue exchangeable bond, citing share price volatility, government policy direction, and protection of shareholder value. Similarly, Pharmaresearch withdrew its plan for a spin- off and a transition to a holding company structure fol - lowing pressure from Must Asset Management, which issued public letters objecting to such plan to other shareholders. On 13 June 2025, Pharmaresearch had disclosed a plan involving a vertical spin-off separat - ing its core business and a transition to a holding
company through an in-kind contribution. Must Asset Management strongly criticised the plan as a measure to reinforce the controlling shareholder’s control over the company. Ultimately, on 8 July 2025, Pharmare - search withdrew the spin-off plan. In addition, Align Partners submitted shareholder pro - posals to Coway seeking the adoption of a cumula - tive voting scheme and the appointment of outside directors, and issued letters to other shareholders advocating enhanced shareholder returns and greater board independence. At the annual general meetings of DI Dongil Corporation and Oscotec, amendments to the articles of incorporation proposed by minority shareholders were approved, illustrating that a wide range of companies have now become the targets of shareholder activism in Korea. 11.3 Interference With Completion There have been several cases where activists have sought to interfere with the completion of announced transactions in Korea. In 2015, Elliott opposed the merger of Samsung C&T and Cheil Industries as share - holders of Samsung C&T. At the time, Elliott claimed that the merger ratio was unfairly disadvantageous to the shareholders of Samsung C&T. At the shareholders’ meeting, which was convened to approve the merger, there was a conflict with the largest shareholder regard - ing use of a proxy, and a preliminary injunction asking the court to stop the merger was filed. However, Elliott failed to prevent the merger because it could not secure sufficient votes to block the merger. In 2018, Elliott argued that the Korean government violated the Korea-US free trade agreement by unfairly intervening in the process of the merger and submit - ted an application for an investor-state dispute against the Korean government. In June 2023, the Permanent Court of Arbitration (PCA) rendered an award order - ing the Korean government to pay approximately KRW130 billion; however, the Korean government ultimately prevailed in the annulment proceedings in the United Kingdom, and the award was set aside and the case was remanded to the arbitral proceedings. In addition, labour unions and minority shareholders often raise claims about mergers and comprehensive share exchanges orchestrated by majority sharehold - ers.
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