Up 44% year-on-year in shareholder proposals
Attempts to neutralize the revised Commercial Act
Despite opposition from national pension and domestic advisors
Overseas voting rights advisors 'yes'
[This article was reported on "Radar M," a paid media outlet specializing in the capital market in Mail Business, on June 18 (15:43)]
Align Partners Asset Management announced on the 18th that it has published a report on "major implications and improvement tasks at the regular shareholders' meeting in 2026."
Based on the major cases identified at this year's regular shareholders' meeting, it has raised the need to improve the system related to the general shareholders' meeting and improve overseas voting advisory firms' recommendations for voting rights in the Korean market.
According to Align Partners, 56 companies and 218 agendas were subject to shareholder proposals at the regular general shareholders' meeting in 2026 (based on separate calculations).
Although it increased significantly from the previous year, which was 39 companies and 151 cases, the overall shareholder proposal approval rate was about 11% (23 cases/218 cases) and the average approval rate was 23.0%.
Institutional investors submitted 69 shareholder proposals for a total of 10 companies. Fourteen of them were approved, recording a 20% approval rate.
Shareholder proposal directors were appointed from DB Insurance, Gabia, Korea Zinc, and Samyoung Electronics Industries. In the case of Gabia, it was recorded as the first case in which two shareholder proposal directors were appointed only by ordinary resolution.
The average approval rate of general shareholders for a total of 37 proposals made by institutional investors, excluding the intensive voting system or the agenda subject to the 3% rule, was 67.5%.
However, it is analyzed that a number of agendas to change the articles of incorporation that do not meet the purpose of the revised Commercial Act were also proposed and approved at this year's regular shareholders' meeting.
Based on the KOSPI 200, △the flexible term of directors (21 companies, 95% approval rate), △the number of directors reduced and the upper limit was set (25 companies, 92% approval rate), △the use of treasury stocks for management purposes (26 companies, 100% approval rate).
Analysts say that the flexible term system for directors could be misused to shorten the term of directors (intensive voting system, weakening 3% rule) by changing the term of office from "three years" to "within three years."
It is pointed out that setting the upper limit of the number of directors and reducing the upper limit can limit the effectiveness of the intensive voting system and block the possibility of replacing the majority of directors, thereby fixing the wrong governance structure.
There are also concerns that the revision of the articles of incorporation of treasury stocks could be used to strengthen the control of the largest shareholder by allowing it to be held and disposed of for "management purposes" without incinerating treasury stocks.
The National Pension Service also publicly expressed its opposition in principle to the agenda in March.
Align Partners also raised the need for overseas voting advisory firms to urgently internalize standards for recommending voting rights in the Korean market.
With the average foreign ownership ratio of listed companies (93%) with controlling shareholders among KOSPI 200 companies reaching about 20%, overseas voting advisory recommendations are an important factor to consider for foreign investors.
According to the analysis of Align Partners, the average approval rate for shareholder proposals from three domestic voting rights advisors (ESG Research Institute in Korea, Sustin Best, and ESG Korea Standards Institute) is about 67%. The average approval rate for the National Pension Service is 69 percent.
On the other hand, the average approval rate of overseas voting rights advisors (ISS, Glad Lewis) was significantly lower at about 26%. The gap was consistently confirmed even when compared on the basis of 48 identical agendas commonly reviewed by these advisors.
Align Partners said it reviewed the standards for recommending voting rights by overseas voting advisory firms and found that the revision of the commercial law implemented after 2025 was not faithfully reflected.
This is in contrast to the fact that major foreign institutional investors quickly reflect the revised commercial law in the guidelines. It was evaluated that the specificity of domestic governance was not sufficiently reflected.
It is pointed out that in Korea, there are many cases in which the agenda of the board of directors reflects the intention of the controlling shareholder and infringes on the rights and interests of general shareholders.
Accordingly, it is explained that when there is no special reason, instead of first approving the board's agenda, it should be considered on the same line based on the impact on shareholder value.
Align Partners also stressed the urgent need to overhaul the legislative and enforcement ordinance of the overall current shareholders' meeting system, which is structurally advantageous for controlling shareholders and existing management.
Major improvement tasks included △ reviewing shareholder agendas and improving conditions for exercising voting rights △ enhancing transparency in the operation of shareholders' meetings △ system security to revitalize shareholder proposals.
Lee Chang-hwan, CEO of Alliance Partners, pointed out, "It is regrettable that most of the articles of association change agenda to neutralize the purpose of this shareholders' meeting were approved despite the will to revise the commercial law and reform the capital market of the new government."
"If the standards for recommending voting rights of overseas voting advisors are advanced and the shareholders' meeting-related system is improved, meaningful changes are expected in the exercise of voting rights by foreign investors and corporate governance," he stressed.
