With the amended Commercial Act taking effect starting with this year's regular shareholder meetings, it appears that a raft of articles of incorporation changes that could undermine the intent of the amendment passed.
Also, the average approval rate for shareholder proposal items at this year's regular shareholder meetings among the top 10 domestic equity managers was tallied at 54%.
Domestic activist fund Align Partners Asset Management issued a report on the 18th titled "Key takeaways and improvement tasks for the 2026 regular shareholder meetings."
Align Partners said in the report, "The number of companies targeted by shareholder proposals and the number of items were counted at 56 and 218, respectively (based on separate counting)."
This is a sharp increase from 39 companies and 151 items a year earlier. Of these, 23 items passed, bringing the overall approval rate to about 11%.
Align Partners analyzed that this "shows that interest in and demand for the exercise of shareholder rights and improvements in corporate governance continue to expand in the domestic capital market."
However, it also appears that articles of incorporation changes that could weaken the intent of the amended Commercial Act passed with approval rates above 90%.
Align Partners explained, "So-called 'three articles of incorporation changes'—flexible director terms, setting and reducing the cap on the number of directors, and allowing disposal of treasury shares for managerial purposes—were proposed at more than 10% of KOSPI 200 corporations and were mostly approved with high support of 92% to 100%."
The National Pension Service and domestic proxy advisory firms generally issued opposing views on the items, but there were many cases in which overseas proxy advisors issued relatively supportive recommendations, according to the analysis.
Align Partners also raised the need to strengthen the voting recommendation standards of overseas proxy advisors for the Korean market.
According to Align Partners, the average approval rate for shareholder proposal items by the three domestic proxy advisors—Korea ESG Research Institute, Sustinvest, and Korea Institute of Corporate Governance and Sustainability—was about 67%, while the National Pension Service's average approval rate was 69%.
However, the average approval rate of overseas proxy advisors was only about 26%. Align Partners said that, based on its review of their voting recommendation standards, the amendments to the Commercial Act implemented since last year did not appear to be fully reflected. It also said that the unique characteristics of domestic governance did not appear to be sufficiently incorporated.
In addition, Align Partners examined voting records on shareholder proposals at this year's regular shareholder meetings by the top 10 domestic asset managers by equity custody balance—Samsung Asset Management, Mirae Asset Global Investments, Korea Investment Management, KB Asset Management, NH-Amundi Asset Management, Shinhan Asset Management, Midas Asset Management, Baring Asset Management, Truston Asset Management, and Kiwoom Asset Management—through the fund voting disclosure system, and found the average approval rate was 54%.
This figure falls short of both the three domestic proxy advisors' average recommendation rate (about 67%) and the National Pension Service's average approval rate (69%).
Lee Chang-hwan, head of Align Partners, said, "Despite the Commercial Act amendment and the new administration's will to reform the capital market, it is disappointing that articles of incorporation changes aimed at neutralizing that intent mostly passed with high approval rates at this shareholder meeting," adding, "If overseas proxy advisors' voting recommendation standards become more sophisticated and the systems related to shareholder meetings improve, there will be meaningful changes in foreign investors' voting and in corporate governance."