Changes to commercial law and stewardship code reshape the landscape
Institutional investors stepping up shareholder rights
Retail investors must learn to spot opportunities in public disclosures
"From 1988 to 2025, the National Pension Service posted an average annual return of 8 percent — higher than real estate rental yields, bank time deposits and retirement pension returns over the same period."
Moon Sung, a partner attorney at law firm Yulchon, made the remarks Saturday at Herald Money Festa 2026, held at Dongdaemun Design Plaza in Jung-gu, Seoul. Moon delivered a lecture on institutional investors' exercise of shareholder rights and the investment opportunities that creates for retail investors.
With amendments to the Commercial Act and the stewardship code pushing institutional investors — including the National Pension Service and activist funds — to assert shareholder rights more forcefully, the session examined how retail investors can respond. The analysis suggested that retail investors now have greater room to identify investment opportunities by tracking changes in institutional shareholdings and voting records.
Moon previously worked at Mirae Asset Global Investments, KDB Daewoo Securities and CJ Group before joining the National Pension Service's fund management division from 2019 to 2022. During his time there, he handled the practical exercise of shareholder rights in listed companies, making him a specialist in corporate governance and the stewardship code.
"Capital market value-up is complete only when three axes turn together: government legislation, corporate governance improvement and investor engagement," Moon said. "We are already seeing effects in the capital market."
A series of regulatory changes has strengthened institutional investors' ability to exercise shareholder rights. Three rounds of Commercial Act amendments since last year have introduced directors' fiduciary duties to shareholders, cumulative voting and the separate election of audit committee members. As a result, candidates backed by minority shareholders are more likely to win board seats, and motions they support are more likely to pass.
Also worth watching is the stewardship code, comprehensively revised for the first time in a decade after its initial enactment in 2016. The revised code requires a review of the need for further amendments and the level of compliance every three years. It also requires signatories to check whether the boards of investee companies have fulfilled their fiduciary duties to shareholders.
"During the 2026 shareholder meeting season, 218 shareholder proposals were filed at 56 companies — a 44 percent increase from last year," Moon said. "Of those, about 11 percent were actually passed." The figures show that regulatory changes are translating into a genuine strengthening of shareholder rights in practice.
Moon identified the National Pension Service and activist funds as the most active institutional shareholders in Korea. He noted a growing trend in which activist funds push companies for specific improvements while the National Pension Service and other institutional investors add their votes in support, producing real change.
"It is not easy for the National Pension Service to drive corporate change on its own," Moon said. "Change in decision-making happens when activist funds raise the issue and the National Pension Service and other institutional investors agree."
Moon said the exercise of shareholder rights by institutional investors leads to higher corporate value and better investment returns. "When institutional investors exercise shareholder rights, long-term investment value is in fact protected — but only when that exercise is substantive and focused," he said. "Meaningful governance improvements appear when there is real engagement: private dialogue, dissenting votes, nomination of director candidates. What matters is how voting rights are actually used."
Moon also outlined ways to identify companies where institutional investors are likely to step up. "Perfect prediction is impossible," he said, "but companies with a price-to-book ratio between 0.3 and 0.5 times tend to become targets for hostile M&A or activist funds. It is also worth looking at companies that hold large cash reserves but neglect shareholder returns, or those where the largest shareholder holds less than 30 percent."
Moon cautioned retail investors, however, against simply buying into a stock the moment they spot institutional activity. While share prices can move in the short term, information asymmetry and high volatility make it difficult for retail investors to match the returns that institutions achieve.
"Over the long term, one option is to diversify through ETFs tracking value-up indexes," Moon said. "And when individuals speak up as minority shareholders, companies are pushed to strengthen the tools that protect minority shareholder rights."
park.jiyeong@heraldcorp.com
an@heraldcorp.com
