2026 corporate governance report

Compliance with key governance indicators expands from prior year

Five new items added to compliance list

'Ready Now' and 'next-generation' candidate pools established

Safeguards against shareholder rights violations introduced at director appointment stage

New audit support team created; dividend predictability strengthened

Hanwha's headquarters in Jangyo-dong, Seoul. [Hanwha Group]
Hanwha's headquarters in Jangyo-dong, Seoul. [Hanwha Group]

Hanwha Corp. is accelerating efforts to overhaul its corporate governance framework, formalizing its CEO succession policy into a written regulation and establishing an independent internal audit support unit. The company also introduced a separate policy restricting the appointment of directors with a history of harming corporate value or violating shareholder rights, and took steps to improve dividend predictability — moves that analysts say have raised its overall compliance with key governance indicators.

According to the Financial Supervisory Service's DART system, Hanwha's 2026 corporate governance report shows an expansion in the number of key governance indicators the company now complies with compared to last year. Five items listed as non-compliant in last year's report have been brought into compliance: establishing and operating a CEO succession policy, setting up an independent internal oversight unit, adopting a policy to prevent the appointment of directors responsible for harming corporate value or violating shareholder rights, providing predictability on cash dividends, and notifying shareholders of dividend policy and implementation plans at least once a year.

The most notable change is the formalization of the CEO succession policy into a written regulation. In last year's governance report, Hanwha said it operated a CEO succession policy but did not have a separate written regulation governing it. This year's report flips that item to compliant, stating that the policy is now operated under a distinct, codified regulation. The move represents a more institutionalized approach to board-led succession procedures and candidate pool management.

Under the succession policy, the company continuously maintains a pool of qualified CEO candidates by comprehensively reviewing their competencies, experience and disposition. Two candidate tiers have been established: a "Ready Now" pool of individuals who can step into the CEO role immediately based on the required competencies and experience, and a "next-generation" pool of candidates being developed over time to eventually assume the position.

Shareholder protection mechanisms have also been strengthened. In last year's report, Hanwha said it operated a process to prevent the appointment of directors responsible for harming corporate value or violating shareholder rights, but noted that the relevant content had not been codified in a separate regulation. This year, the company said that policy has also been formalized into a standalone written regulation. The move comes amid growing calls in South Korea's capital markets for expanded director fiduciary duties and stronger protections for ordinary shareholders, introducing a safeguard against potential shareholder rights violations starting at the director appointment stage.

Internal audit functions have been reinforced as well. Hanwha said in this year's report that it has established and is operating an "audit support team" as an independent unit to assist internal audit work. The team was created last November, and the audit committee was granted the right to approve the appointment and dismissal of its members to ensure independence.

The predictability of the shareholder return policy has also improved. Hanwha said it announced in February the record date of March 31 for cash and in-kind dividends, disclosing the dividend decision at the same time to provide predictability. The company also published its corporate value enhancement plan — including its shareholder return policy — in January, posting both Korean- and English-language versions on its website, thereby satisfying the requirement to notify shareholders of its dividend policy and implementation plans.

Industry observers say that as the government has actively encouraged companies to improve corporate governance and disclose corporate value enhancement plans, Hanwha has been strengthening its institutional foundation by overhauling its succession framework, internal controls and shareholder return policy. The company recently decided to spin off business units to clearly delineate the succession domains of Hanwha Group Chairman Kim Seung-youn's three sons, signaling the full-scale start of third-generation management, while also pursuing enhanced shareholder returns.


keg@heraldcorp.com