With the March regular shareholder meeting season ahead, disclosures on management control disputes by Korea's listed companies have surged from a year earlier. In particular, after the National Assembly passed the "third Commercial Act amendment bill" the previous day, centered on mandating the cancellation of treasury shares, analysts said battles over management control between corporations and activist funds are expected to intensify.
According to the Financial Supervisory Service's electronic disclosure system on the 27th, from Jan. 1 to the day, disclosures filed by KOSPI, KOSDAQ and KONEX-listed corporations during management control disputes under "filing or application of lawsuits, etc." (including duplicates by corporations) totaled 70. That is up 25% from the same period a year earlier. Total disclosures were 313 in 2024 and 340 in 2025, continuing an upward trend.
Experts point to the "first and second Commercial Act amendments," implemented last year, as the trigger for the surge in management control lawsuits. With the first amendment expanding directors' duty of loyalty to shareholders and the second introducing cumulative voting at listed companies with assets of 2 trillion won or more, the two measures combined to create an institutional foundation for minority shareholders to challenge management control on all fronts.
Attorney Cheon Jae-min of Barun Law LLC said, "As the expansion of the target of directors' duty of loyalty took effect and the so-called '3% rule,' which limits the voting rights of the largest shareholder's side when appointing audit committee members, was implemented, an environment favorable for minority shareholders to challenge management control has been created."
The rapid pace of policy implementation is also cited as a factor behind the increase in disputes. Cho Dong-geun, an emeritus professor in the Department of Business Administration at Myongji University, said, "After policy changes, the market needs time to adapt, but this amendment moved quickly," and analyzed, "This aspect contributed to the increase in disclosures of lawsuits over management control disputes."
On top of this, with the third Commercial Act amendment bill mandating the cancellation of treasury shares added the previous day, concerns are being raised that companies' capacity to defend management control could be weakened. As allocations of treasury shares and exchanges of friendly equity—tools that had been put to good use as defense measures—are fundamentally blocked, the diagnosis is that listed companies could be left unprotected against activist funds' offensives.
Hwang Yong-sik, a professor in the School of Business Administration at Sejong University, said, "Unless complementary measures such as dual-class shares and poison pills are put in place, as in major overseas countries, activist funds' 'shaking' of corporations will increase," adding, "It is a structure in which management control disputes can only continue to grow."
In fact, activist funds have recently been ratcheting up pressure on corporations through open letters and shareholder proposals. Align Partners Asset Management sent an open shareholder letter to Coway on the 13th, calling for a revamp of its capital structure and stronger board independence. Truston Asset Management sent shareholder letters to Taekwang Industrial and KCC, demanding the purchase and cancellation of treasury shares. The U.K.-based activist fund Pallas Capital demanded that LG Chem sell about 10% of its equity in LG Energy Solution.
Amid this trend, corporations are posting a series of disclosures related to the cancellation of treasury shares. From Jan. 1 to the day, 112 disclosures titled "decision to cancel shares" were filed. That is double from the same period a year earlier. The previous day, KOSPI-listed Kiwoom Securities disclosed it would cancel 695,345 common shares, and Nexen also disclosed it had decided to cancel 1 million common shares.