“Minority Stakes as Weapons”: Korea’s Activist Wave Enters a Second Act on the Back of Legal Change

Amended corporate law catalyzes a broader activist push
Large-scale campaigns now targeting major conglomerates
Investor participation patterns begin to shift across the market

Shareholder activism is wielding growing influence in Korea’s capital markets. Two rounds of amendments to the Commercial Act have pushed corporate governance and shareholder rights to the forefront, creating an environment where even small equity stakes can exert meaningful pressure on companies. Major conglomerates have in turn become repeated targets, and a slew of campaigns is emerging ahead of year-end shareholder meetings. While such moves are clearly burdensome for management, many observers say they could ultimately improve transparency in decision-making and help mature Korea’s capital markets.

An open door for activist funds

In recent months, Korean executives have grown increasingly uneasy as activist funds step up efforts to challenge corporate governance and shareholder returns on the back of relatively modest stakes. Korea, where many firms are controlled by owner families with comparatively low shareholdings, is seen as especially fertile ground for activism. As the year draws to a close, signs are mounting that multiple large-scale campaigns will unfold in parallel. Year-end is traditionally when activists rush to build positions and file shareholder proposals before the shareholder registry is closed, making it the period when their influence is most visible.

This trend is tightly linked to changes in the legal framework. Amendments passed in July expanded directors’ fiduciary duties to cover both the company and its shareholders, while the normalization of electronic proxy voting and virtual shareholder meetings opened new channels for minority investors to address boards directly. Mandatory cumulative voting has further tilted the field in activists’ favor: by concentrating votes on a particular agenda item, even small shareholders can now push for board appointments or restructuring demands. At the same time, retail-investor platforms such as ACT have sprung up, making it easier to form shareholder coalitions.

Policy shifts have also strengthened the wind at activists’ backs. A rise in early delistings had stoked anger among existing investors, but once the government pledged to tackle the so-called “Korea discount,” it accelerated capital-market reforms. The delisting framework—long criticized for being far more lenient on exits than on listings—was rapidly overhauled. These reforms dovetailed with activists’ narrative of “management accountability,” giving additional weight to campaigns centered on governance reforms and strategic change.

Advisory firms and investment banks see emerging opportunities. As companies are forced to craft more sophisticated defenses against activist pressure, demand is rising for integrated services that cover proxy contests and shareholder-meeting strategy. Some advisers report increased work around building counter-arguments to shareholder proposals, analyzing ownership structures, and assessing the likelihood of competing campaigns. In this sense, the expansion of activism is effectively opening up a new market for the advisory business.

Share prices are rising, but companies are not celebrating

Against this backdrop, the range of activist targets has expanded naturally toward large-cap companies. Some funds are no longer limiting themselves to calls for higher dividends or improved operational efficiency, instead mounting full-scale challenges to corporate governance and board composition. Combined with year-end strategies tied to the closing of shareholder lists, this has left many big companies under pressure to prepare far more elaborate defenses than in previous years. Because these efforts reach into the basic principles by which companies are run, the stakes are viewed as particularly high.

One of the most prominent recent cases centers on LG Chem, now under pressure from UK-based activist fund Palliser Capital. Arguing that the stock is undervalued, Palliser has publicly demanded board improvements, a share-price-linked compensation scheme, share buybacks funded by holdings in LG Energy Solution, and a long-term share-price support program. LG Chem’s stock jumped about 13 percent in a single day after the letter became public and has retained most of those gains. Yet the company is deeply concerned that such moves could hurt the long-term value of its battery subsidiary. Given Palliser’s track record of pushing Samsung C&T and SK Square in similar ways before exiting with profits, LG Chem cannot rule out the possibility that the fund is primarily pursuing short-term gains.

Activist pressure on large corporations is by no means limited to LG Chem. KT&G is grappling with a shareholder derivative suit brought by Flashlight Capital Partners (FCP), which claims the board inflicted roughly 690 million dollars in damage on the company by donating treasury shares for free or at steep discounts. Korea Kolmar Group, Nexen Tire, and Coway have also surfaced as campaign targets, raising the prospect that the upcoming AGM season will see simultaneous battles over dividend policies, governance reforms, and control-related share races.

Experts say activism has entered a full-fledged expansion phase. In its “2025 AGM Preview,” the Ajou Institute of Corporate Management highlighted stronger dividend demands, amendments to articles of incorporation, more shareholder proposals, and more intense control disputes as the main themes of this year’s meetings. The institute noted that activist campaigns are likely to have especially long-lasting effects at large conglomerates, where complex ownership webs and multiple stakeholders make defense harder. Companies are thus being forced to respond on two fronts: in the short term by dealing with open letters, changes in disclosed shareholding purposes, and strategic alliances, and in the longer term by rethinking board composition and overall capital policy.

A sign of financial-market maturation

Market participants are watching closely to see how activism reshapes Korea’s financial system. Opinions diverge on whether it will help resolve the Korea discount or devolve into purely short-term profit-seeking. Optimists welcome the fact that companies are finally starting to listen to shareholders, while others worry that mid- and small-cap firms—whose management has fewer tools to defend control—will feel disproportionately exposed. In effect, activist pressure is testing what standards Korea’s capital markets are prepared to accept.

Recent cases make this learning process clear. In 2023, Osstem Implant effectively moved toward delisting after MBK Partners and Unison Capital Korea conducted two tender offers through a special-purpose vehicle. SM Entertainment became the stage for a public bidding war as HYBE and Kakao launched competing tender offers following an initial governance challenge by Align Partners, eventually pushing the stock price above the tender-offer level. Hanssem likewise saw the controlling shareholder’s stake climb into the mid-35 percent range after an IMM Private Equity tender offer of about 69 million dollars. In each instance, activism acted as a catalyst for re-rating share prices while forcing market participants to adopt new response strategies.

Perceptions of activism are evolving as well. The predatory image built around earlier cases involving players such as Sovereign and Elliott is fading, replaced by a growing view that activism can be a legitimate channel for raising concerns. Coalitions of powerful retail investors, shareholder campaigns coordinated through social media, and resistance to dual listings and spin-offs have combined to create an environment in which listed-company boards and management must pay far closer attention to shareholder sentiment. Activism is thus moving from the preserve of a few specialized funds toward a more generalized mode of participation in the capital market.

The recent control dispute at STIC Investments shows how these dynamics are spilling over into the asset-management and private-equity space. In recent years, STIC has built up substantial retained earnings through exits such as LIG Nex1 and a ten-bagger return on its HYBE investment, but it delayed decisions on buybacks and ownership consolidation, leaving the founder with only a mid-teens equity stake. During that time, an activist coalition accumulated more than 25 percent of the shares, tilting the balance of power.

The coalition argues that the firm has failed to secure even a basic level of governance stability expected of a listed company and is demanding immediate board restructuring, dividend increases, and share cancellations. STIC, for its part, is now concentrating on building a defense that preserves its existing lines of business and growth strategy centered on private and alternative investments. In the market’s view, this is more than a single firm’s governance issue; it is a textbook example of how much investor expectations have risen for listed private-equity structures as a whole. As activist campaigns intensify, companies and asset managers are being pushed into an environment where they have little choice but to strengthen governance transparency and deepen engagement with their shareholders.