On July 21, 2026, the Korean government promulgated an amendment to the Enforcement Decree of the Korean Commercial Code (the “KCC”) (the “Enforcement Decree”). The amendment aims to improve corporate governance and facilitate the exercise of shareholder rights by requiring the adoption of virtual shareholders’ meetings and revising existing measures to reflect the new independent director system. Pursuant to the amendment, the provisions relating to virtual shareholders’ meetings will take effect on January 1, 2027, while those relating to the independent director system took effect on July 23, 2026 and the rest of the provisions took effect upon promulgation on July 21, 2026.

Recently, the scope of issues raised by minority shareholders has expanded beyond customary matters—such as shareholder returns and the appointment of officers—to include more specific topics. These topics include (i) the Corporate Value-Up Program, (ii) executive compensation structures and conditions, and (iii) corporate restructurings, including mergers and spin-offs. Accordingly, the 2027 annual general shareholders’ meeting season will require meticulous preparation, particularly in terms of shareholder and institutional investor relations, as well as the operation of these meetings. Notably, as the aggregated 3% voting-rights cap and the mandatory cumulative voting system under the amended KCC will apply for the first time to the 2027 general shareholders’ meetings, it will be crucial for companies to secure the support of general shareholders, including institutional investors. Given that the implementation of virtual shareholders’ meetings will further expand the means by which general shareholders participate in the 2027 annual shareholders’ meetings, it has become increasingly important for companies to prepare for and respond appropriately to these changes.

The detailed provisions of the amended Enforcement Decree are as follows.
 

• Scope of Companies Subject to Mandatory Virtual Shareholders’ Meetings: Listed companies with total assets of KRW 2 trillion or more as of the end of the most recent fiscal year are subject to mandatory convening of virtual shareholders’ meetings.

• Requirements for Convening Virtual Shareholders’ Meetings: Subject companies must establish standards and procedures for performing duties related to convening and operating virtual shareholders’ meetings, and secure the necessary personnel and physical infrastructure.

• Requirements for Managing Institutions: Managing institutions must have the appropriate personnel and physical facilities, a system to protect shareholders’ personal information and backup facilities necessary to ensure business continuity in case of accidents.

• Operating Rules: Subject companies may (i) permit attendance at their virtual shareholders’ meetings by shareholders who have applied in advance, in the manner prescribed and by the day before the date of the general meeting, in order to secure simultaneous connection lines and manage their servers, and (ii) establish rules to determine in advance the number and duration of shareholders’ questions and remarks, in order to ensure the proper operation of the meetings.

• Attendance Method: Subject companies may establish identity verification procedures for attending virtual shareholders’ meetings (i.e., methods under the Electronic Signature Act and the Act on Promotion of Information and Communications Network Utilization and Information Protection). They can also set separate procedures (e.g., entering a shareholder identification number and password provided by the company) for foreign shareholders residing overseas who cannot use electronic signatures or similar means.
   

• Terminology Alignment for Introduction of Independent Director System: In the Enforcement Decree, the term “outside director” for listed companies has been changed to “independent director.”

• Revision of Provisions Following Prohibition on Issuing Exchangeable/Redeemable Bonds Using Treasury Shares as Underlying Asset: The Enforcement Decree has been amended in line with the prohibition on issuing bonds that can be exchanged for or redeemed with treasury shares.

• Allowing Business Reactivation Notifications by Electronic Means for Dormant Companies: Previously, notifications to resume business by dormant companies were limited to written submissions. Electronic notifications are now allowed to improve convenience for the public.
   

In preparation for the 2027 annual general shareholders’ meetings, large listed companies with total assets of KRW 2 trillion or more—which are mandated to hold virtual shareholders’ meetings—should carefully review internal regulations and select an external managing institution to manage their virtual meetings during the second half of 2026. In particular, these companies should focus on the following: (i) adopting standards and procedures for the stable operation of shareholders’ meetings in the event of IT failures or other disruptions, (ii) ensuring that any standards limiting the frequency and duration of shareholders’ questions and remarks during virtual meetings are reasonable, and (iii) selecting and appointing an appropriate managing institution equipped with adequate personnel and physical facilities, as well as a system for protecting shareholders’ personal information, to operate the virtual shareholders’ meetings. Furthermore, even listed companies that are not subject to the mandatory virtual shareholders’ meeting requirement may consider the voluntary implementation of such meetings to improve shareholder communication—particularly in transactions such as corporate restructurings where heightened shareholder protection obligations apply—and demonstrate exemplary governance.

[Korean Version]