In this op-ed, Kim Woo-chan, a professor at Korea University and director of the Economic Reform Institute, highlights critical items for shareholders to consider during the upcoming annual general meetings (AGMs). The key focus is on proposed amendments concerning the number of board directors and the length of their terms. Such amendments are concerning as they may undermine the intent of recent reforms aimed at enhancing the independence of boards, particularly the mandatory implementation of cumulative voting and the separated election of audit committee members. The cumulative voting system allows major shareholders to distribute votes among multiple candidates, thereby increasing the likelihood of electing candidates supported by minority shareholders.

One critical example provided in the article illustrates the potential consequences of setting a cap on the number of directors elected. If a company currently has seven serving directors and changes its bylaws to impose a strict cap at seven, it could effectively shut out candidate recommendations from minority shareholders, as there would be no vacant positions to contest. This scenario diminishes the impact of any shareholder-friendly voting changes, as the barriers to entry for new candidates become insurmountable. The article notes that although only a few companies had announced their AGMs at the time of writing, several had already implemented caps that raise these barriers—companies like EcoPro, KakaoPay, and Krafton have opted for a new cap of seven directors.

Furthermore, the article warns of potential tactics that could further restrict shareholder participation. For instance, existing directors may resign just before their terms expire, leading to a temporary AGM where new directors are appointed with less than six weeks' notice, which violates the legal requirement for shareholder proposals to be submitted six weeks prior to the AGM. This maneuver could result in the dismissal of any proposals from minority shareholders, ultimately allowing only the candidates recommended by the boards to be elected unopposed. The implications of these practices are worrying for the empowerment of general shareholders and the overall governance structure of these companies.