[Invest&Law] Shareholder Proposals Emerge as a Tool for Defending Managerial Control... "Majority Shareholders Take the Lead"

"Majority Shareholders Now Amend Articles of Incorporation
in the Battle to Defend Managerial Control"

Shareholder proposals, once considered a means to strengthen the rights of minority shareholders, are now increasingly being used as a strategy by majority shareholders to defend their managerial control. In particular, there has been a noticeable rise this year in attempts to restructure corporate governance through amendments to articles of incorporation, resulting in shareholder proposals taking on different purposes and forms compared to the past.

According to Hanwha Investment & Securities on April 28, the number of listed companies with shareholder proposals was 73 in 2023, 68 last year, and 59 as of the second week of this month in 2025. Taking into account shareholder meetings scheduled for the remainder of this year, the total number of shareholder proposals for the year is expected to slightly surpass last year's figure.

While the number of companies with shareholder proposals accounts for only 2-3% of all listed firms, both the content and the initiators have changed significantly compared to previous years. The most notable change is the identity of the initiators. In 2023, only 10.6% of all shareholder proposals were submitted by majority shareholders, but this figure rose to 18.5% last year and surged to 36.5% this year.

Um Sujin, a researcher at Hanwha Investment & Securities, stated, "The proportion of shareholder proposals initiated by majority shareholders has clearly increased, especially among companies experiencing management disputes," adding, "There are more cases where systems intended to protect minority shareholders are being used as tools for either defending or attacking managerial control."

In fact, major companies that have recently experienced management disputes have shown significant changes both in the number and content of shareholder proposals. At Korea Zinc, the majority shareholder group submitted large-scale director appointments and articles of incorporation amendments as agenda items. Similarly, at T'way Air, multiple proposals for articles of incorporation amendments and director dismissals were pursued during a management dispute. There were also attempts to revise articles of incorporation to restrict the authority of the board of directors or to strengthen the voting rights of certain shareholders.

There has also been a clear shift in the types of agenda items. In the past, most shareholder proposals focused on the appointment of inside or outside directors, but this year, 'amendment of articles of incorporation' has accounted for the largest share. The articles of incorporation are documents that set out the basic operating rules of a company, governing key issues such as the composition of the board of directors, share issuance, and dividend policies. Attempting to amend the articles of incorporation is a strategic move that goes beyond simply replacing management, aiming to restructure the company's governance itself.

However, about 40% of shareholder proposals this year were automatically withdrawn before reaching a vote at the shareholders' meeting. Although the number of proposals has increased, their actual impact remains limited. Um added, "In 2023 and last year, proposals initiated by majority shareholders had a much higher approval rate than those submitted by minority shareholders or institutional investors. However, this year, there have been a large number of proposals by majority shareholders that were withdrawn or automatically discarded during the management disputes at Korea Zinc and T'way Air, showing a different pattern from previous years."