As the KOSPI market strengthens and shareholder activism becomes more active, voices have emerged calling for institutional safeguards to minimize the side effects.
Recently, shareholders have gone beyond the role of simple investors to exert direct influence on corporate decision-making through various means such as sending open letters, submitting shareholder proposals, and filing derivative suits. As a result, concerns have been raised that the authority of corporate boards may weaken, potentially leading to harm to various stakeholders, including consumers and workers.
The Federation of Korean Industries (FKI) on the 16th pointed out these problems in a report titled "Trends in shareholder activism and tasks for response," commissioned to Choi Jun-sun, an emeritus professor at Sungkyunkwan University Law School.
According to the report, shareholder activism has surged recently, and the legal tools to control it remain insufficient. Data from the global research firm "Diligent Market Intelligence" show that the number of domestic corporations targeted by activism jumped from 10 in 2020 to 66 last year. According to disclosures from the Financial Supervisory Service, a total of 164 shareholder proposals were submitted at the regular shareholders meetings of 42 listed companies this year, up 20% from the previous year (137).
The report said the increase in the number of retail investors (6 million in 2019 → 11.4 million in 2024) and the mobilization of individual shareholders through online communities accelerated this trend.
The problem is that the spread of such shareholder activism could infringe on the independence and autonomy of boards. In particular, with the recent amendment to the Commercial Act, there is also an opinion that if bills such as "mandatory cancellation of treasury shares" and "advisory shareholder proposals" pass, the center of corporate management could shift from the board to the shareholders meeting.
There were also concerns that shareholders meetings could stray from their original function and turn into arenas of social conflict. The reasoning is that if shareholders' rights are overemphasized, the interests of other stakeholders—such as workers, partner companies, and consumers—could be infringed.
Accordingly, Professor Choi emphasized in the report that legislative supplements are urgently needed to prevent the abuse of shareholder powers. Choi proposed applying the same disclosure standards as those for major shareholders when general shareholders recommend board candidates, and establishing a prior monitoring system to address the opacity in the proxy solicitation process.
Choi also said a monitoring system is needed to block unfair transactions, such as providing internal information obtained by shareholders to outsiders for private gain, or spreading false information through online platforms.
Choi said, "Corporations should also establish or improve board operation rules to clearly set eligibility requirements that can be applied to both board-recommended director candidates and those proposed by shareholders, and take steps to disclose them in advance."