Korea's listed companies have wrapped up their 2026 annual general meetings. This year's shareholder meetings were significantly influenced by three rounds of Commercial Act amendments that proceeded since the second half of last year. The "director's duty of loyalty to shareholders" and "mandatory treasury stock cancellation" provisions took effect starting with this year's AGMs, while the remaining amendments will be implemented in phases after July.
In response, some listed companies have taken preemptive strategic measures. Ahead of the mandatory cumulative voting system and expanded number of separately elected audit committee members taking effect after September, some companies proposed agenda items including "reducing the cap on board directors" and "adjusting director terms" as charter amendments. While some proxy advisory firms raised concerns about potential infringement of shareholder rights regarding these items, cases where companies provided sufficient situation-specific explanations resulted in positive outcomes. Companies will need to develop proactive explanation strategies going forward.
Another notable feature of this year's AGM season was the active pursuit of treasury stock cancellation by some major listed companies. Since utilizing treasury shares for broad business purposes such as introducing new technologies or improving financial structures requires prior charter amendments through special shareholder resolutions, developing advance strategies for this will also become increasingly important.
Major Commercial Act amendments including strengthened 3% rule for appointing and dismissing audit committee members, introduction of cumulative voting, and expansion of separately elected audit committee members will become mandatory after July and September respectively. Additionally, as the National Pension Service disclosed its voting guidelines and key cases reflecting the intent of the Commercial Act amendments in March, companies are now required to take a more meticulous approach to AGM preparations. Consequently, companies preparing for their 2027 AGMs need to conduct preliminary reviews of these standards.
The NPS voting guidelines are likely to become more stringent particularly regarding reductions in the maximum number of directors, flexibility in director terms, adjustments to auditor quotas, treasury stock holding and disposal regulations, and agenda items for approving treasury stock holding and disposal plans. For treasury shares specifically, consistency between the purpose disclosed at acquisition and actual utilization is expected to become a key criterion.
Furthermore, the Financial Services Commission's announcement of the "Financial Sector Governance Advancement Task Force" results in April and the implementation of related laws in October are also cited as variables that will affect future AGMs. Considering past precedents where governance system changes in the financial sector spread to non-financial sectors, non-financial companies should also prepare for their 2027 shareholder meetings.
With this evolving governance environment, shareholder activism is expected to become more active at 2027 AGMs than before. The Commercial Act amendments since the second half of last year, the NPS's disclosure of voting guidelines, and discussions on improving financial sector governance suggest that shareholder activism, which previously focused on shareholder returns such as dividends and treasury stock cancellation, may expand to overall management matters including board composition. Accordingly, companies need to establish enterprise-wide response systems encompassing IR, finance, planning, and legal departments, while strengthening communication with investors.