South Korea and Japan are both eyeing significant reforms in the corporate governance arena that aim to unlock growth and strengthen accountability to investors. South Korea passed a corporate reform bill with the objective of boosting shareholder returns last week, while Japan received expert insights as part of its ongoing outreach on proposed revisions to the country’s corporate governance code.

Supporting Shareholders

South Korea has looked to improve the rights of minority shareholders and lessen the hold maintained over family-owned conglomerates, the Chaebol. The country’s National Assembly last week approved an alteration to the Commercial Act which means Korean companies are required to cancel newly acquired treasury shares within a year and existing shares within 18 months. This is intended to crack down on corporate governance issues which have detrimentally impacted on shareholders and limited the growth potential of Korean companies.

This change aims to eliminate practices that allowed controlling families to stockpile treasury shares, maintaining voting power, suppressing share prices, and later reissuing shares to consolidate control or influence mergers.

This is not the first move South Korea has made with the aim of supporting minority shareholders in recent times. In July, the National Assembly overwhelmingly backed a corporate governance reform bill looking to bolster transparency in capital markets and improve protections for minority shareholders, as reported by Minerva Analytics. This bill meant company directors became legally required to act in the interest of shareholders as well as for the company, which looks to dilute family control of companies. It also mandated hybrid shareholder meetings for large firms.

AGM Advice

Hybrid AGMs remain a focal point in Japan’s ongoing consultation on revisions to the Corporate Governance Code. At a recent session of the Expert Panel on the Revision of the Code, the International Corporate Governance Network (ICGN) reinforced its support for hybrid formats, emphasising that the Code should avoid endorsing fully virtual AGMs, which risk weakening shareholder rights and limiting meaningful participation.

While hybrid meetings offer efficiency and wider access, the surge in virtual‑only AGMs, with more than 500 companies adopting provisions enabling them, has prompted concerns about governance quality and shareholder engagement. The Tokyo Stock Exchange’s Corporate Governance White Paper 2025 illustrates how rapidly these practices have spread. Minerva Analytics last year reported that Japanese companies have accelerated the uptake of virtual-only AGMs, with more than 500 adopting articles to allow such meetings according to the Tokyo Stock Exchange’s Corporate Governance White Paper 2025, almost tripling compared to 2023.

Enhancing Engagement

ICGN also mentioned that it was “pleased” with the code’s strengthened language on constructive dialogue with shareholders, particularly the “added expectation that outside directors should engage in dialogue where topics warrant it”. However, the network suggested this dialogue could be strengthened further. “If the governance reform agenda is to fully achieve its goals, it will require a continued cultural shift towards genuine two-way dialogue between companies and their shareholders,” the network said in its statement.

The ICGN reiterated its support for Japan’s governance reform agenda, adding that “Japan has established itself as a leader in its approach to governance reform, and we want to see that leadership position maintained and strengthened. We encourage the Government not to slow its pace of reform”.

In November, Japan’s Prime Minster Sanae Takaichi criticised companies for focusing too much on shareholders and taking insufficient action to increase wages in the country. Takaichi stated plans to “revise the corporate governance code to encourage companies to appropriately distribute resources not just to shareholders but to employees”.

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