3/17/2026
Companies Yield to Activist Funds’ Governance Demands
BusinessKorea (03/17/26) Young-sil, Yoon
As activist funds intensify their campaigns, a shift in the climate among listed companies is being detected. While companies previously limited themselves to defending against such campaigns, recent cases have emerged where they are actively accommodating the demands of activist funds to improve corporate governance. Analysts suggest that with the amendment to the Commercial Act and other changes, an environment is taking shape where companies can no longer ignore the demands of activist funds. According to industry sources on March 17, Truston Asset Management withdrew its shareholder proposal submitted for KCC’s (KRX: 002380) annual general meeting scheduled for March 26. This followed KCC’s board of directors sending an official letter the previous day accepting Truston’s demands. Earlier, Truston had sent an open shareholder letter to KCC’s board of directors on Feb. 11, demanding the liquidation of non-core assets including Samsung C&T (KRX: 028260) shares and the cancellation of all treasury shares excluding those designated for employee compensation (RSU). KCC announced through a disclosure on March 9 that it would cancel 1,174,300 shares (13.2% of total issued shares) out of its 1,532,300 treasury shares, excluding the portion for employee compensation, in installments by September of next year. KCC also indicated its willingness to liquidate Samsung C&T shares. In the official letter sent to Truston the previous day, KCC stated that it would sell assets held for investment purposes at an appropriate time and return a portion of the sale profits to shareholders. In response, Truston stated, “We welcome this,” adding, “This decision will serve as an important milestone in that KCC’s board of directors has begun to substantively reflect the reasonable voices of ordinary shareholders in its management.” Align Partners Asset Management also withdrew the shareholder proposal it had filed against SoluM (KRX: 248070). This came after successfully reaching an agreement for the advancement of SoluM’s governance and maximization of shareholder value. Align Partners agreed to drop its lawsuit for invalidation of new share issuance and related injunction once SoluM implements the agreed measures. The conflict between the two parties began in July of last year when SoluM issued redeemable convertible preferred shares (RCPS) through a third-party allotment. The RCPS, valued at 120 billion won (approximately $81 million), included the right for SoluM CEO Jeon Seong-ho to exercise call options to acquire new shares. Align Partners argued that this infringed on the rights of ordinary shareholders. Under this agreement, CEO Jeon agreed to allocate 50% of the call option shares granted to him as incentives for key executives and employees recommended by the compensation committee, and to not exercise preemptive rights for the RCPS. The agreement also included restructuring of the board centered on expanding independent directors and transitioning to a professional management system. The change in corporate attitudes is interpreted as the result of an environment being created where it is difficult to ignore the demands of activist funds. This is because the rights of ordinary shareholders have been strengthened with the implementation of the amended Commercial Act, which includes directors’ fiduciary duties to shareholders. Analysts also suggest that with the reinforcement of legal mechanisms such as the separate election of audit committee members, the influence of activist funds on corporate decision-making has expanded. The level of pressure from activist funds continues to rise. Align Partners has filed shareholder proposals against Coway (KRX: 021240), DB Insurance (KRX: 005830), Gabia (KOSDAQ: 079940), A-Plus Asset (KRX: 244920), and Dentium (KRX: 145720), among others. Among these, Align Partners is also pursuing legal procedures against Gabia, which refused to disclose its executive compensation structure, including filing an injunction with the court. Truston continues its campaign, even demanding that Taekwang Industrial (KRX: 003240) voluntarily delist. VIP Asset Management, which has advocated for quiet activism, exercised dissenting voting rights against Daewon Industrial (KOSDAQ: 007680) , putting the brakes on a general meeting agenda item for the first time since the company’s establishment. Lee Nam-woo, Chairman of the Korea Corporate Governance Forum, evaluated, “Companies accepting the demands of activist funds is a positive change in the market resulting from the amendment to the Commercial Act,” adding, “It means that the awareness of shareholder protection among controlling shareholders and boards of directors is improving.” He continued, “Not only activist funds but also domestic and foreign asset management companies are saying that communication with companies has become easier ahead of this year’s general meetings,” and added, “There are quite a few cases that have not been made public where agreements were reached at the stage before sending open shareholder letters or filing shareholder proposals.”
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