This article appeared on the capital markets compass 'Signal' at 4:57 p.m. on July 22, 2026.
The "combined 3% rule," which caps the voting rights of the largest shareholder and related parties at 3% when appointing audit committee members, is expected to face its first test in September. The codification of directors' fiduciary duty to shareholders, the core of last year's Commercial Act revision, took effect upon promulgation of the bill. Meanwhile, provisions raising the ratio of outside directors (independent directors) and expanding separately elected audit committee members had a significant impact on this year's regular shareholder meetings. Analysts say that when the combined 3% rule joins these existing revised provisions, changes to corporate governance could begin in earnest.
According to the electronic disclosure system on the 22nd, Daelim Paper, a KOSDAQ-listed company, plans to hold an extraordinary shareholder meeting on September 24 to discuss motions to dismiss and appoint audit committee members. The motions Daelim Paper has tabled at the proposal of shareholders and the board include dismissing an existing audit committee member, reappointing an independent director, and newly appointing an independent director to serve as an audit committee member. Because the combined 3% rule takes effect from the 23rd of this month under the revised Commercial Act enacted last year, Daelim Paper's largest shareholder and specially related parties can exercise voting rights only up to a combined 3%. In addition, two or more audit committee members must be elected separately.
The combined 3% rule could bring changes to audit committee composition, leading to checks on the largest shareholder. Before the revised Commercial Act took effect, an "individual 3% rule" applied, under which the largest shareholder and its specially related parties could each exercise 3% voting rights without combining their shares. Under the combined 3% rule, because the largest shareholder's side can exercise voting rights only up to 3% after totaling all its shares, the likelihood of appointing an audit committee member from the largest shareholder's side decreases, while the likelihood of appointing a candidate supported by general shareholders increases.
The core of last year's Commercial Act revision was the codification of directors' fiduciary duty to shareholders and the strengthening of the independence of boards and audit committees. Among these, directors' fiduciary duty to shareholders took effect upon promulgation of the revised bill in July last year. Other provisions, such as raising the ratio of independent directors on listed companies' boards from one-quarter to one-third and expanding separately elected audit committee members, took effect in July and September this year, respectively, with related bylaw amendments made in advance at regular shareholder meetings earlier this year. The combined 3% rule and mandatory cumulative voting were not applied immediately.
Next year, companies will have to apply most of the revised Commercial Act's provisions and are expected to face governance changes. Starting with next year's regular shareholder meetings, large listed companies with total assets of 2 trillion won or more must introduce cumulative voting as well as electronic shareholder meetings. When the combined 3% rule joins this, the number of directors from the largest shareholder's side within the board decreases, while the likelihood of minority shareholders or activist funds entering the board increases significantly, and the level of checks strengthens.
"In response to the revised Commercial Act, companies have taken measures such as reducing the number of board seats or diversifying terms," a legal industry source said. "However, over the medium to long term, they cannot avoid the impact of voting rights restrictions, so the governance landscape is likely to change."
