This article was published on the 21st at 5:26 p.m. on Signal, a capital markets service.
Since South Korea revised its commercial law to extend directors' fiduciary duty to shareholders, corporate fundraising and mergers and acquisitions have run into sharp resistance in one case after another. As shareholders increasingly invoke the duty to challenge rights offerings and other moves as damaging to shareholder value, companies have withdrawn their plans in a row. While the law has curbed some cases of companies blindsiding investors, there are concerns that it is chilling normal business activity and disrupting how capital markets function.
According to South Korea's electronic disclosure system, 22 notices of withdrawn rights offerings were filed this year through the 20th of this month, double the 11 recorded in the same period last year. Last year, such withdrawals mostly stemmed from subscribers failing to meet their obligations, but this year, protecting shareholder value has emerged as the main reason. In a June disclosure canceling a rights offering, KOSDAQ-listed Dimoa cited "the possibility of harm to existing shareholders' economic interests from share dilution" and said it would reconsider its fundraising method.
The tender offer market, a tool for restructuring corporate governance, has taken a direct hit. Of nine tender offers aimed at delisting over the roughly 13 months since the shareholder fiduciary duty took full effect on July 22, 2025, four effectively failed for falling short of the required subscription rate. Given that only one of 10 offers failed in the preceding 13 months, the difficulty has risen sharply. In the case of Golfzon Holdings, which recently failed to secure its target volume in a tender offer, major shareholder Turton Capital, a U.S. activist fund, objected that "the board did not fulfill its fiduciary duty to all shareholders."
The expansion of directors' fiduciary duty has a positive side in protecting the rights of ordinary shareholders. Companies have recently been setting up special committees composed solely of independent directors to vet the legitimacy of decisions that alter governance, such as mergers or capital increases, before making them. But there are also concerns that oversight of boards and controlling shareholders has become so strong that companies are finding it hard to make swift management and investment decisions. An industry official said, "Since the commercial law revision, disputes have increased, making it harder to pursue rapid business realignment or restructuring."
Clashes Over Price, Process and Disclosure
Capital market disputes over directors' fiduciary duty to shareholders are erupting across the board, involving board resolution procedures, valuation and disclosure. The resulting side effect is that decisions on investment to secure future growth and on improving financial structure are being delayed for extended periods. Some interpret this as also showing the law's benefits, with fewer mergers or duplicate listings that clearly run against ordinary shareholders' interests.
According to investment banking industry sources, many listed companies, including Golfzon Holdings, Gabia, EcoPro BM and SK D&D, are embroiled in disputes with major investors over shareholder fiduciary duty following decisions on tender offers or rights offerings.
SJ Investment Holdings, the special purpose company (SPC) conducting the tender offer for Golfzon Holdings, voluntarily amended its tender offer report and statement on the 21st, reinforcing explanations of its funding structure and the sale of a subsidiary stake. The industry sees the amended disclosure as stemming from disputes with investors over the tender offer. Turton Capital, a U.S. activist fund manager, sent two open letters to the Golfzon Holdings board, taking issue with a tender offer funding structure heavily reliant on borrowing, the basis for calculating the tender offer price, and the plan to sell the subsidiary.
Golfzon Holdings is the parent of Golfzon, which operates screen golf and golf courses. SJ Investment Holdings, an SPC set up by the side of former Golfzon CEO Kim Won-il, conducted a first tender offer from June 29 to August 5 this year, raising the combined stake held by related parties to 76.85%. That is a stake sufficient to carry out a comprehensive share swap through a special resolution at a shareholders' meeting, but a second tender offer is underway. As the purpose of the tender offer, it cited cutting the cost of maintaining a listing and resolving duplicate listing. But with Turton Capital and some minority shareholders pushing back, it is uncertain whether the target volume will be secured.
There are also cases of attempts to reshape boards by claiming a breach of shareholder fiduciary duty. Align Partners Asset Management, a domestic activist fund manager, recently requested an extraordinary shareholders' meeting to reshape the board of Gabia, a KOSDAQ-listed company. Gabia is currently the subject of a tender offer by Macquarie Asset Management aimed at a voluntary delisting. Align Partners argued that the board did not properly review and resolve the matter before Macquarie launched its tender offer for Gabia. On that basis — that the board failed to fulfill its fiduciary duty to all shareholders — it requested an extraordinary meeting centered on an agenda item to appoint new directors.
Industry Investment Decisions Disrupted
As disputes multiply, business realignment and fundraising are growing harder for companies. A prime example is EcoPro BM, whose planned rights offering has been delayed by conflict with minority shareholders. EcoPro BM planned a 1.2 trillion won ($860 million) capital increase to fund new investments, including a smelter in Indonesia, but the date has been pushed back indefinitely as some shareholders objected and the Financial Supervisory Service demanded amendments. EcoPro BM CEO Kim Jang-woo said at a shareholders' briefing on the 21st that the fundraising amount could be reduced to 900 billion won.
In the case of SK D&D, capital reinforcement is urgently needed for financial stability, but its capital increase schedule is being pushed back amid minority shareholder pushback and regulatory intervention. SK D&D saw its credit rating cut to the BBB- range this year, making market borrowing effectively impossible, and it incurred contingent liabilities. Its major shareholder sought to inject capital, but with some minority shareholders objecting, the Financial Supervisory Service suspended the effect of the filing, halting the plan.
As a result, calls are growing, especially in industry, to weigh the side effects of checks on controlling shareholders and boards. In particular, there are concerns that even though shareholder fiduciary duty is written into the revised commercial law, government authorities have piled on various overlapping rules, such as "duplicate listing guidelines," paralyzing the capital-raising function. Only one company, K Bank, has newly listed on the KOSPI market this year. An investment banking industry official said, "Rights offerings, tender offers and initial public offerings (IPOs) are all shrinking," adding, "When it becomes hard for companies to raise capital, it disrupts the securing of medium- to long-term growth engines, so remedies must be found."
Of course, some in the capital markets assessed that stronger checks on controlling shareholders are not without benefits, with fewer spin-offs, duplicate listings and deliberate efforts to suppress share prices. Matters that significantly affect governance and shareholder value, such as listing after a spin-off, carry a high risk of disputes, and under the revised law, most companies now refrain from pursuing them from the start — a kind of self-cleansing. On top of that, the market's assessment is that the practice among some listed companies of deliberately keeping share prices low for purposes such as succession has also declined.
An official at an activist fund manager said, "As legislation has made clear that a company's directors must be faithful to all shareholders, it has had the effect of reducing 'deviations' by some problem companies," adding, "We must not overlook that minority shareholders' rights are improving under the commercial law revision."
