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“How much stock do I need before I can demand anything from the company?” It is the first question minority shareholders ask. The Korean Commercial Act uses a tiered structure: the larger your stake, the more powerful the rights you may exercise. For an unlisted company, three thresholds matter – 1%, 3% and 10%.

[Contents]

1. Why your shareholding ratio comes first – the threshold structure

2. The 1% tier – two rights aimed directly at directors

3. The 3% tier – intervening in corporate decision-making

4. The 10% tier – the last card, petition for dissolution

5. Not enough alone? Aggregate – joint exercise of rights

6. Listed companies face far lower thresholds

1. Why your shareholding ratio comes first – the threshold structure

Shareholder rights fall into two groups: those exercisable with a single share (voting rights, the right to claim dividends) and those requiring a minimum percentage of total issued shares. The latter are minority shareholder rights.

These rights carry thresholds because they are interventionist in nature – opening the accounting books, forcing a general meeting, suing directors. Without any limit, company operations could be paralysed, so a minimum bar exists.

In practice, then, the first question is not “am I a shareholder?” but “which tier does my stake fall into?” The strategy changes entirely depending on which threshold governs the right you need.

2. The 1% tier – two rights aimed directly at directors

From 1% of total issued shares, two rights targeting directors personally become available.

Injunction against unlawful acts (Commercial Act Article 402, 상법 제402조). Where a director acts in violation of statutes or the articles of incorporation and this risks causing the company irreparable damage, an auditor or a shareholder holding at least 1% may demand, on behalf of the company, that the director cease that act. Crucially, this stops conduct in progress rather than unwinding damage after the fact.

Shareholder derivative suit (Article 403(1), 상법 제403조 제1항). Where the company declines to pursue a director's liability, a shareholder may sue on the company's behalf. Procedurally, the shareholder must first demand by written notice stating the grounds that the company bring suit; if the company does not sue within 30 days of receiving the demand, the shareholder may then sue directly (Article 403(3)). Where waiting would risk irreparable damage, suit may be filed immediately (Article 403(4)).

Both rights are designed for the situation where a controlling shareholder shields the director in question, leaving majority voting useless as a check.

3. The 3% tier – intervening in corporate decision-making

Crossing 3% unlocks most of the core minority rights – the tier at which you can reach into the company's decision-making itself.

1. Shareholder proposal (Article 363-2(1), 상법 제363조의2 제1항) – a shareholder holding 3% or more of issued shares excluding non-voting shares may propose agenda items in writing or by electronic document six weeks before the general meeting. The lead time is tight, so work backwards from the meeting date.

2. Right to convene an extraordinary general meeting (Article 366(1), 상법 제366조 제1항) – by submitting to the board a writing or electronic document stating the agenda and the reasons for convening.

3. Petition to remove a director or auditor (Article 385(2), 상법 제385조 제2항) – where a director has committed a dishonest act or a serious violation of statutes or the articles in connection with their duties and removal has been voted down at the general meeting, a 3% shareholder may petition the court for removal. Article 415 applies this to auditors as well. The prior rejection at the meeting is easy to overlook.

4. Right to inspect and copy accounting books (Article 466(1), 상법 제466조 제1항) – by written demand stating the reasons. Under Article 466(2), the company may not refuse unless it proves the demand is improper, so the burden of justifying refusal rests on the company.

5. Petition to appoint an inspector (Article 467(1), 상법 제467조 제1항) – where dishonest conduct or a serious violation in the execution of business is suspected.

In practice the usual sequence is to secure evidence through book inspection first, then proceed to a removal petition or derivative suit. Sequencing the rights matters more than considering each in isolation.

4. The 10% tier – the last card, petition for dissolution

A shareholder holding 10% or more may petition the court to dissolve the company where compelling reasons exist (Article 520(1), 상법 제520조 제1항). As the most drastic right – ending the company's existence – its requirements are correspondingly strict.

In reality it is granted only in exceptional situations, such as where management or disposal of company assets has become markedly difficult, or shareholder deadlock has left the company unable to function. Other remedies are normally examined first.

5. Not enough alone? Aggregate – joint exercise of rights

“But I only hold 2%.” The answer is that the thresholds do not assume sole ownership.

Shareholding requirements may be met by aggregating the stakes of several shareholders. Two shareholders with 2% each together hold 4% and may jointly exercise 3%-tier rights. Article 542-6(9) expressly provides that, for listed companies, a “holder of shares” includes persons jointly exercising the shareholder rights of two or more shareholders, and in unlisted companies joint exercise on aggregated holdings is likewise standard practice. Most shareholder activism in Korea meets the thresholds precisely this way.

Joint exercise does require attention to several practical points.

1. Record the agreement to act jointly – identifying who exercises which right and for what purpose reduces procedural challenges from the company.

2. Align registered and beneficial ownership – entitlement is assessed against the shareholder registry, so nominee holdings or untransferred shares should be resolved first.

3. Manage the timing of qualification – the aggregate must meet the threshold at the time of the demand, and the listed-company regime separately requires six months of continuous holding.

4. Plan for withdrawal – if a participating shareholder sells out, the threshold may fail. For derivative suits, however, a post-filing drop below 1% does not affect the action unless the shareholder ceases to hold any shares at all (Article 403(5)).

6. Listed companies face far lower thresholds

The percentages above apply to unlisted companies. For listed companies, Article 542-6 (상법 제542조의6) grants shareholders who have held continuously for six months far lower thresholds: 1.5% to convene an extraordinary meeting or appoint an inspector; 1% for shareholder proposals (0.5% for listed companies prescribed by Presidential Decree); 0.5% to petition for removal of a director or auditor (0.25% for large listed companies); 0.1% for book inspection (0.05% for large listed companies); 0.05% for injunctions (0.025% for large listed companies); and 0.01% for derivative suits. Under Article 542-6(8) a company may set a shorter holding period or lower ratio in its articles, so check the articles too.

Note that the amended Commercial Act effective 10 September 2026 concerns mandatory cumulative voting and expanded separate election of audit committee members at listed companies; it does not change the shareholding thresholds discussed above. That said, listed-company shareholders now have additional levers at the board-composition stage, so it is worth designing strategy around both together.

In short, not all shareholders hold the same rights – but a small stake does not mean no rights. Check, in order: where your stake sits among 1%, 3% and 10%, which threshold governs the right you need, and if you fall short, whom you can aggregate with.

Cheongchul Law Firm has handled numerous matters involving minority shareholder rights and control disputes – inspection of accounting books, convening extraordinary meetings, petitions to remove directors, and derivative suits. We recommend starting with a review of the rights available for your stake and the order in which to exercise them.

This post is provided for general legal information only and does not constitute legal advice on any specific matter. Thresholds and procedures vary with listing status, the articles of incorporation and the facts of each case, so please consult a lawyer.