Conglomerates move to amend bylaws, reshape boards ahead of tighter shareholder rules
South Korea’s shareholder meeting season starts this week, with major conglomerates such as Samsung Electronics and Hyundai Motor Group convening annual general meetings that will focus on governance changes and corporate strategies.
This year’s meetings are drawing heightened attention, with business groups rushing to amend bylaws and bolster management control before revisions to the Commercial Act take effect in the second half of the year. As major conglomerates view upcoming meetings as a final chance to adjust rules in ways that favor controlling shareholders, tensions are expected to rise between corporate leadership and activist investors.
According to the Korea Securities Depository on Monday, a total of 211 listed firms will hold annual meetings this week alone — including 102 companies on the main Kospi board and 107 on the Kosdaq market — making it a highly concentrated period that market watchers have dubbed “shareholder meeting super week.”
The lineup includes some of the country’s largest companies. Hyundai Mobis will kick off the week on Tuesday, followed by meetings on Wednesday at Samsung Electronics, Samsung SDI and Samsung Electro-Mechanics.
On Thursday, Hanwha Ocean, LG Display, Hyosung Heavy Industries, followed by Friday sessions at Kia, Samsung Biologics and LG Energy Solution.
Next week, more companies are slated to hold meetings, including Korea Zinc — currently in the midst of a heated management control battle — on March 24, SK hynix on March 25, and Hyundai Motor, Hanwha Corp. and LG Corp on March 26.
Governance changes take center stage
Corporate governance restructuring stands out as the dominant agenda this year, as companies move to get ahead before amendments to the Commercial Act take effect, a set of rules that aim to strengthen oversight of corporate boards and rights of minority shareholders.
From July 23, top shareholders and related parties will have their voting rights capped at 3 percent when electing audit committee members. Starting Sept. 10, companies will also face mandatory cumulative voting and will have to increase the number of separately elected audit committee members from one to two.
In response, many companies are preemptively adjusting their boardroom structures before the rules take effect.
Samsung Electronics and Samsung SDS are proposing to replace fixed three-year director terms with a more flexible “within three years” structure. Hanwha affiliates seek to extend terms from “within two years” to “three years or within three years.”
Governance advocates argue that such flexibility allows director terms to be spread out on a case-by-case basis, reducing the number of seats up for election at any given meeting. This would lower the odds of minority shareholder-backed candidates securing board seats under cumulative voting rules.
Meanwhile, some major companies are moving to cut the maximum number of board members and then nominating exactly that number. With no vacant seats, alternative slates are effectively blocked, making it difficult for minority shareholders to gain board seats.
Hyosung Group affiliates have proposed reducing board caps from 16 directors to seven to nine, while Hanwha Galleria seeks to shrink its board from 13 to seven, and LS Electric from nine to five.
Future strategies
Beyond governance reforms and shareholder return policies, this year’s meetings are also expected to cover business strategies and future visions.
At Samsung Electronics, shareholders will likely focus on the outlook for the semiconductor division, particularly the company’s standing in high-bandwidth memory chips, as well as foundry investments and the possibility of special dividends following the recent rebound in performance.
Hyundai Mobis will put Executive Chair Chung Euisun’s reappointment as an inside director to a shareholder vote. Hyundai Motor plans to add vehicle rental business to its corporate purpose, signaling a broader push into mobility subscription and vehicle leasing services.
sahn@heraldcorp.com
