Korea’s Governance Revolution: What Boards and Investors Need to Know Now

Korea’s 2025 AGM season was highly anticipated, marking the first year after the launch of the government’s Value Up Program - a sweeping initiative aimed at tackling the long-standing “Korea Discount” and driving governance reforms.

Shareholder activism, already on the rise, gained momentum with proposals shifting from demands for higher returns to governance-focused measures such as board nominations, cumulative voting, and enhanced disclosures on capital allocation and compensation. Minority shareholders - especially retail investors - are now more organized and influential, leveraging digital platforms and custodial voting to amplify their voice.

At the same time, regulatory changes under the Commercial Act are reshaping board discussions and engagement practices, introducing expanded cumulative voting, stricter independence standards, hybrid meetings, and new director requirements. Most reforms carry varying grace periods, but their impact will be felt soon, with further measures - including mandatory cancellation of treasury shares - already under discussion.

With activism evolving, minority shareholders gaining power, and regulations changing fast, how should boards and investors respond to stay ahead and create long-term value?

1. Embrace Governance as a Strategic Priority

Boards must move beyond compliance and treat governance as a driver of value creation. This means embedding transparency, oversight, and accountability into the core of board practices - not just as a response to regulatory requirements, but as a proactive strategy to build investor trust and unlock market value.

2. Engage Early and Often with All Shareholders

The rise of retail investor influence means boards can no longer focus engagement solely on institutional investors. Companies should leverage new digital platforms and structured engagement programs to understand and address the concerns of all shareholders. Early, direct dialogue can help preempt activism and foster collaborative solutions.

3. Prepare for Sophisticated, Governance-Focused Proposals

Shareholder proposals are becoming more detailed and demanding. Boards should anticipate calls for director nominations, cumulative voting, and enhanced disclosures. Proactively reviewing and updating governance policies, capital allocation strategies, and compensation frameworks will help companies stay ahead of activist demands.

4. Adapt to Regulatory Change - Don’t Wait for Deadlines

With major amendments to the Commercial Act and more reforms on the horizon, companies should act now to align with new requirements. This includes updating director duties, preparing for hybrid meetings, and ensuring board independence. Early adaptation not only ensures compliance but also signals a commitment to best practices.

5. Monitor the Market and Stay Agile

The pace of change in Korea’s governance environment is unprecedented. Boards and investors should closely monitor regulatory developments, market responses, and emerging trends in shareholder activism. Flexibility and a willingness to update policies and engagement strategies will be key to navigating this dynamic landscape.

In summary:

Korea’s governance revolution is here, and the coming months will be crucial in shaping the future of the market. By embracing governance as a strategic priority, engaging actively, and remaining agile to adapt early to regulatory changes, boards and investors can not only meet evolving expectations but also to drive sustainable value in a rapidly changing environment.