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Home > LAWREVS > WILJ > Vol. 15 > No. 1 (2006)

 

Washington International Law Journal

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The article was written by Hee Chul Kang and translated into English by Eugene Kim.

Abstract

On September 15, 2004, the South Korean press gave extensive news coverage to a series of private individual “Question & Answer” session meetings which the Capital Group Companies Fund (“Capital Group”) held with many of the top chief executive officers (“CEOs”) of major Korean corporations. Known worldwide as a top U.S. private equity management company, the Capital Group is currently the largest institutional investor in South Korea. As a major shareholder of large corporations such as Samsung Electronics, the Shin Han Financial Group, SK Group, and Hyundai Motors, the U.S. investment firm invited their CEOs to address questions and seek answers concerning the corporations’ overall performance and business trends. The fact that the CEOs readily accepted the Capital Group’s invitation reveals just how great of an influence foreign investment funds exert on corporate management and governance of major corporations in South Korea. News of Sovereign Asset Management (“Sovereign”)’s clash with SK Corporation (“SK”) in early 2004 has also been well publicized, highlighting foreign funds’ willingness to participate in company management in South Korea. After having acquired 14.99% of SK Corp. shares, the European private equity fund took a hostile turn against SK Corp.’s management and controlling shareholders. At SK Corp.’s annual shareholders meeting held in March 2004, Sovereign submitted a shareholder proposal seeking to elect new candidates for the board of directors and to amend the company’s articles of incorporation, culminating in a bitter proxy contest between Sovereign and SK Corp. This Article explores the current state of investments by foreign funds in South Korea and examines related legal issues. Part I briefly summarizes the basic concepts and types of investment funds. Part II examines the current status of securities investments made by foreign funds in South Korea. Part III examines several key legal issues in connection with such investments.

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