The 55th Annual General Meeting of Samsung Electronics is being held on the morning of March 20, 2024, at Suwon Convention Center in Yeongtong-gu, Suwon, Gyeonggi Province. (Image courtesy of Yonhap)
SEOUL, March 24 (Korea Bizwire) — The rise of retail investor activism, fueled by online platforms and collective action, is reshaping South Korea’s corporate governance landscape — and sparking concerns over potential threats to management stability, according to a new report by the Korea Chamber of Commerce and Industry (KCCI).
The report, released Sunday, reveals that shareholder proposals from small investors and retail investor alliances more than doubled from 33 cases in 2015 to 73 cases in 2024. The findings are based on an analysis of 1,993 shareholder proposals submitted during 453 shareholder meetings held over the past decade across 412 companies.
The KCCI noted that while this trend, referred to as “K-shareholder activism,” signals growing shareholder empowerment, it could also destabilize corporate governance if unchecked. The report calls for the introduction of internationally accepted corporate defense mechanisms, such as dual-class shares and poison pill provisions, to ensure companies can prioritize long-term growth, investment, and shareholder returns without being derailed by short-term activism.
Data from the report show that small shareholders now hold an average stake of 47.8% in major listed companies — 10 percentage points higher than the 37.8% held by major shareholders and related parties. The imbalance is even more pronounced among smaller and mid-sized companies, particularly those led by individual founders, making them more vulnerable to activist coalitions.
The KCCI categorized South Korean shareholder activism into three types:
- Profit-Enhancing Activism, which calls for dividend increases and improved transparency but could push companies toward short-termism.
- Ideological Activism, led by civic groups and platforms focusing on social and governance reforms, which the report warns may ultimately undermine shareholder value.
- Takeover-Driven Activism, often led by global private equity firms seeking management control and profit, raising risks of critical industries and technologies being transferred overseas.
The report further cautioned that, without proper defense mechanisms, companies may shift focus to accumulating defensive shares rather than investing in growth and shareholder returns.
“While K-shareholder activism is unique and has contributed to shareholder rights, it is beginning to disrupt business operations and could harm the broader economy,” said Kang Seok-gu, head of research at the KCCI. “Rather than overhauling corporate law, targeted revisions to capital market regulations would be a more effective approach.”
Countries like the United States, the United Kingdom, the European Union, and Japan have long adopted robust corporate defense tools. The KCCI urged South Korea to follow suit to protect domestic firms from hostile takeovers and ensure sustainable governance in an increasingly activist environment.
Ashley Song (ashley@koreabizwire.com)
