The 2026 regular shareholder meeting season has concluded. With the KOSPI breaking the 6,000-point mark and the Commercial Act being revised, interest in shareholder meetings was hotter than ever. In particular, as this was the last shareholder meeting before the revised Commercial Act on board composition takes effect in September, strategic agenda items proposed by listed companies and sharp scrutiny from investors clashed head-on.
The primary means of scrutiny was shareholder proposals. The number of companies where shareholder proposals were tabled surged from 41 last year to 58, and razor-thin vote battles unfolded across the board. As a result, shareholder proposals were passed at a total of 15 companies, leading to assessments that we have effectively entered a "golden age of shareholder proposals."
Shareholder proposals for amending articles of incorporation mainly centered on explicitly requiring the separate election of all audit committee members or introducing a lead independent director system. Attempts to exert substantive influence over board composition and operations will grow stronger going forward. In director appointments as well, cases in which audit committee members recommended by activist funds join boards as outside directors are no longer unfamiliar.
The agenda item on director compensation limits has also come under the influence of a recent ruling. In April last year, the Supreme Court ruled that when a person is both a director and a shareholder, the agenda item setting his or her own compensation limit involves a direct personal interest, and thus voting rights cannot be exercised on that item. Until now, voting had been customarily permitted on the grounds that such resolutions set the aggregate compensation for all directors, but this ruling has made fundamental revision of existing practices unavoidable. In particular, in structures where major shareholders concurrently serve as directors, the voting quorum itself may be shaken, and voices are growing louder calling for a reorganization of the methods and procedures for resolving compensation limits. Following this ruling, new trends have emerged, including an increase in shareholder proposals regarding compensation limits and the passage of advisory resolutions demanding disclosure of compensation systems.
When the second revised Commercial Act takes effect this September, the shareholder meeting scene will be shaken once again. For listed companies above a certain size, the pathway for ordinary shareholders to place their preferred candidates on the board will be significantly expanded. Standing competition over board composition rights is now expected to begin in earnest. Investors anticipate this as a catalyst for improving corporate governance. On the management side, however, considerable concerns are being raised about practical side effects such as a lack of board expertise and delays in decision-making.
With the Commercial Act revision, the generational demand for improved corporate governance and the practical concern over increased management uncertainty have begun to clash in earnest. The point our capital market must now contemplate is finding the "subtle art of sophisticated operation" that allows the structural changes brought by the revised Commercial Act to translate into real enhancements of shareholder value and corporate value. Depending on this, future shareholder meetings could become either an arena of wasteful disputes or a venue for collaboration aimed at value creation.
