As South Korea approaches its March regular shareholder meetings, publicly traded companies are accelerating preparations in light of the new amendments to the commercial law that target traditional board practices, commonly referred to as 'rubber stamp' boards. These reforms, set to be implemented in the second half of the year, aim to democratize the decision-making process in companies by mandating stricter voting procedures and increasing the independence of board members.

The focus is particularly on the upcoming 'second amendment to the Commercial Law,' effective in September, which stipulates mandatory cumulative voting for companies with assets over 2 trillion won and a requirement for at least two independent directors on the audit committee. This legislation is designed to lower the barriers for independent directors and auditors from the interests of major shareholders. However, many companies are preemptively raising obstacles, seeking to maintain their board's power structure amidst these changes.

Among the companies most actively responding is Hanwha Group, which has proposed extending board member terms from the current two years to three years in multiple subsidiaries. By implementing these changes, they assert that they are improving decision-making processes; however, critics argue that this undermines the effectiveness of the new law. Reducing the number of directors and extending their terms could hinder the ability of regular shareholders to elect candidates, potentially nullifying the intended effects of the cumulative voting system that would empower minority shareholders to have a say in board composition.