[Invest&Law] Next Month's Shareholders' Meeting Season, Flood of Shareholder Proposals

Corporate Value-Up Program Launching Soon
Activist Funds Taking Proactive Actions

Ahead of the regular shareholder meeting season in March, activist funds have taken 'action.' They are flooding shareholder proposals aimed at increasing the shareholder return rate of corporate profits.

With the government announcing a 'Corporate Value-Up Program' to resolve the 'Korea Discount' phenomenon where the Korean stock market is undervalued, it is evaluated that minority shareholders are stepping up to expand shareholder profits, supported by this initiative.

Currently, in the case of Kumho Petrochemical, the activist fund CH Partners Asset Management has joined forces with former Kumho Petrochemical executive Park Cheol-wan to submit shareholder proposals demanding 'share buybacks' and 'appointment of outside directors.' Truston Asset Management announced that it would propose director candidates to Taekwang Industrial.

On March 11, 2021, at the Westin Chosun Hotel in Jung-gu, Seoul, Executive Director Park Cheol-wan is speaking at a press conference themed on enhancing the corporate value of Kumho Petrochemical. Photo by Moon Ho-nam munonam@

The hottest issue is Samsung C&T. Ahead of the Samsung C&T regular general meeting scheduled for the 15th of next month, a coalition of five activist funds including the UK-based asset management firm City of London, Whitebox Advisors, and Anda Asset Management submitted shareholder proposals calling for increased shareholder returns through 'share buybacks' and 'cash dividends.' Their combined stake is 1.46%. They demanded a 500 billion KRW share buyback and a dividend of 4,500 KRW per common share (4,450 KRW for preferred shares).

In response, the board proposed a dividend of 2,550 KRW per common share (2,600 KRW for preferred shares) as an agenda item. As a vote showdown is anticipated at the general meeting, Samsung C&T unusually appealed to shareholders to delegate their voting rights. Samsung C&T stated, "If cash outflows occur as demanded by the activist funds, it will be difficult to secure investment funds for future growth engines and strengthening business competitiveness."

Activist funds are also becoming a variable in chaebol family management disputes. The activist fund La D?fense led the integration decision between Hanmi Pharmaceutical and OCI Group. In this process, the eldest son of the founder, President Lim Jong-yoon of Hanmi Pharmaceutical, and the second son, CEO Lim Jong-hoon of Hanmi Precision Chemical, who were excluded, proposed the appointment of six new directors including themselves at the Hanmi Science general meeting. They expressed their intention to directly engage in management through director appointments.

Reporter Lim Hyun-kyung, Legal News