Shareholder activism refers to shareholders actively influencing corporate management decisions based on their ownership stakes. It differs from ordinary investing in that activists go beyond buying and selling shares to seek higher corporate value by demanding increased dividends, share buybacks and cancellations, governance improvements, board changes, and business restructuring.
Shareholder activism can take many forms. Institutional investors may begin with private discussions with a company, then send an open letter to shareholders or directly propose agenda items for a general meeting. This can lead to a so-called “proxy fight,” in which activists recommend candidates for directors or auditors and solicit proxy votes from other shareholders in support of their proposals. Shareholder activism can be led not only by activist funds but also by pension funds, asset managers, and coalitions of individual shareholders. An activist fund is a fund that acquires shares in a company to secure shareholder status and then actively exercises influence over the company’s decision-making.
Shareholder activism has also grown rapidly in South Korea. According to global research firm Diligent Market Intelligence, the number of Korean companies targeted by activist demands rose from 10 in 2020 to 66 in 2024. At the 2025 annual general meetings, a total of 164 shareholder proposals were submitted at 42 listed companies, an increase of about 20 percent from 137 the previous year. In particular, there have recently been more cases in which minority shareholders, as well as activist funds, join forces through online platforms and directly submit shareholder proposals.
The regulatory environment is also changing in ways that amplify the shareholder voice. The Commercial Act amended in July 2025 explicitly requires directors, when performing their duties, to protect the interests of all shareholders—not just the company—and to treat shareholders fairly. Known as the “duty of loyalty owed by directors to shareholders,” it has been in effect since July 22, 2025. Further amendments to the Commercial Act were made in September of the same year. As a result, listed companies with total assets of at least KRW 2 trillion may no longer exclude cumulative voting through their articles of incorporation, and the number of audit committee members who must be elected separately from directors will increase from one to two. These provisions have been in effect since September 10, 2026.
The role of institutional investors is also being strengthened. In December 2025, the Financial Services Commission and the Korea Institute of Corporate Governance and Sustainability, among others, announced measures to strengthen the substance of the Stewardship Code . The Stewardship Codeis a voluntary guideline requiring institutional investors such as pension funds and asset managers, as fiduciaries entrusted with clients’ assets, to monitor companies and exercise voting rights responsibly. A system will be introduced to assess how faithfully participating institutions actually implement the principles and disclose the results.
However, the core agenda of shareholder activism in South Korea remains focused on shareholder returns and governance issues, including dividends, treasury shares, director appointments, and governance improvements. Overseas, environmental and social issues such as climate change, human rights, and worker safety have become major subjects of shareholder proposals, but such items are still rarely brought before general meetings in South Korea.
Environmental, social, and governance information disclosed by companies can serve not merely as sustainability management reporting, but also as a basis for institutional investors’ engagement with companies, voting decisions, and future shareholder proposals. Companies now need to view shareholder activism not simply as an issue to address immediately before a general meeting, but as a question of what information they share with shareholders on an ongoing basis and how they explain management decisions.
by Editor O