Starting July 15, 2026, the so-called '3% rule' will limit the voting rights that the largest shareholders can exercise when a listed corporation selects its audit committee members to 3%. Corporations are struggling to prepare countermeasures as this rule, included in the amendment to the Commercial Act, is aimed at weakening the influence of dominant shareholders and facilitating the entry of minority shareholders and activist funds into the board of directors, a provision opposed by the business community.
On the 15th, the government held a Cabinet meeting and voted on a bill to revise part of the Commercial Act that expands the scope of the fiduciary duty of corporate directors (from companies to companies and shareholders) and enforces the 3% rule. The 3% rule will take effect one year from the date of its announcement.
Listed corporations with assets of 2 trillion won or more, which are required to establish an audit committee, will be subject to the 3% rule starting next year. Usually, the selection of audit committee members is conducted at regular shareholder meetings, and it is expected that audit committee members under the 3% rule will be appointed starting from the regular shareholders' meeting in 2027.
The audit committee will perform tasks such as ▲ evaluating the operational status of the internal accounting management system ▲ monitoring the activities of management ▲ monitoring compliance with laws and regulations ▲ selecting and supervising external auditors ▲ protecting shareholder rights. Currently, the voting rights of the largest shareholders are limited to 3% when selecting audit committee members, but starting July 15, 2026, the voting rights of both the largest shareholders and related parties will be restricted to 3%.
Some corporations are seeking countermeasures, believing that the amended 3% rule will hinder stable management activities by speculative capital. Among the business community, changing bylaws to make the qualifications of audit committee members more stringent or restricting the range of documents that audit committee members can access are being discussed. There are also plans to secure friendly equity.
However, amending the bylaws is a matter requiring a special resolution, and more than two-thirds of voting rights must agree. If the largest shareholders do not hold a significant amount of equity, amending the bylaws may be difficult.
In the capital market, it is believed that corporations with numerous relatives holding divided equity will be significantly affected by the 3% rule. Until now, even with a low shareholding ratio for the largest shareholders, they have been able to select their desired audit committee members with the help of relatives' equity.
Some believe that even if the audit committee members are elected from outside, their influence on the board of directors will not be as significant as expected. This is because their usual term is short, lasting only two years, and they do not take on leading roles within the board.