Activist investors gearing up for shareholder meetings, aiming to expand boardroom influence

Ahead of the March regular general meeting of shareholders, when directors’ fiduciary duty to shareholders under the Commercial Act of the Republic of Korea will be fully applied, activist investors are preparing for a showdown with listed companies as they seek seats on corporate boards. Observers note that their demands have become more aggressive than ever, ranging from calls to "ban the dual role of group owner or CEO as chair of the board" to demands to "delist the company" or "sell strategic equity stakes in other firms."
According to this newspaper’s reporting on the 3rd, disclosures on management control disputes at domestic listed companies have surged ahead of the March regular general meeting of shareholders. In the six months since the first-phase amendment to the Commercial Act of the Republic of Korea passed last year (from September last year to this March), there have been 477 cases of management control disputes, including lawsuits and related filings, involving companies listed on the Korea Composite Stock Price Index (KOSPI) and the Korea Securities Dealers Automated Quotations (KOSDAQ). This represents a 101% jump from the same period a year earlier. Analysts say battles over management control between activist funds and other shareholder groups on one side and listed companies on the other are set to intensify further.
In practice, activist and speculative capital are expected to ratchet up their offensive during this March shareholder meeting season. Palliser Capital, a United Kingdom of Great Britain and Northern Ireland (United Kingdom)-based activist fund reported to hold about a 1% stake in LG Chem, has even filed for a court injunction to place its shareholder proposals on the agenda of the regular general meeting of shareholders. It is demanding that its shareholder proposals be put to a vote and that roughly 10% of LG Energy Solution shares be sold. Truston Asset Management has called on Taekwang Industrial to voluntarily delist, and has separately urged KCC to sell its stake in Samsung C&T, valued at around 4.9 trillion won.
Commentators say these moves go beyond calls for higher dividends and stronger shareholder return policies, and instead aim to expand activists’ presence on boards, overhaul decision-making structures, and deepen their involvement in corporate management. To that end, a series of attempts is expected at the March regular general meeting of shareholders to "introduce and apply early" the cumulative voting system and the separate election of audit committee members, which are scheduled to take effect from September under the second-phase amendment to the Commercial Act. DB Insurance and Align Partners Asset Management are set to face off in a proxy fight at this month’s shareholder meeting over the election of an independent (outside) director. Align Partners Asset Management holds about 1.9% of DB Insurance shares.
For listed companies, this shareholder meeting is effectively their "last chance" to shape board composition in their favor, and many are struggling to devise defensive strategies. A business community official stated, "Voices calling for expanding board representation as a way to increase intervention in management have grown louder than ever."
ehcho@fnnews.com Cho Eun-hyo Reporter