Korean Shareholder Disputes on the Rise at Courts Throughout Korea

In South Korea, IPG Legal has seen over the last few years an increase in shareholder disputes, particularly concerning management control and corporate governance issues. IPG Legal is engaged by shareholders and companies in disputes in Korean courts and at the Korean Commercial Arbitration Board and other arbitration boards. Please see IPG Legal’s Korean Corporate Law Archive and IPG Legal’s Business Law Archive for more articles on Korean Shareholder Rights and Shareholder Disputes in Korea.

Rising Number of Shareholder Disputes in Korea

• 2024: 87 publicly traded companies had a total of 315 cases (estimate) related to corporate control lawsuits. This is an 18.4 percent increase from 2023.
• 2020-2024: While the specific number of disputes is not widely reported or easily discoverable, the number of disputes within small, non-listed companies drastically increased over the past five years.

The most significant number of Korean shareholder disputes relates to the following issues:

• Management Control Disputes in Korea: These disputes, typical, concern issues concerning the composition of the board of directors, voting rights, issuing of shares to management, fiduciary duties of management, and interested transactions between management, shareholders, and interested third parties. Many of the actions of management are also criminal and handled simultaneously in criminal courts.
• Corporate Governance Disputes in Korea: These disputes usually concern issues related to corporate governance structures and asset-liability structures of business groups and affiliates. In most cases, the issues concern large publicly listed companies and/or cross-border issues.
• Disputes Related to Restructuring of Companies in Korea: These disputes, generally, relate to mergers, valuation of shares, reverse mergers, and composition of the board of directors.
• Shareholder Disputes Related to Distributions in Korea: These disputes arise over, mainly, the misappropriation of company funds and inconsistent or unpredictable distribution of company profits to shareholders.

We shall be writing more posts over the next couple of weeks on Korean shareholder rights issues. Many changes have occurred in jurisprudence and in statutory law over the past few years that justify a refresh of past articles.

Sean Hayes is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only a few non-Korean lawyers as a Top Attorney by AsiaLaw,  IPG Legal is consistently ranked a Top Dispute Resolution Law Firm for our litigation, arbitration, and mediation services, and IPG Legal is consistently rated a top-tier law firm in corporate law, litigation, arbitration, franchise law, distribution law, estate law, family law, employment & labor law, and criminal defense.

Sean is regularly quoted by leading international media sources, including the Wall Street Journal, New York Times, France 24 and Bloomberg.

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