Activist fund Align Partners and SoluM have reached a landmark agreement, potentially resolving a major governance dispute that has weighed on the company's stock.
On March 16, 2026, the two parties announced a settlement where Align will withdraw its shareholder proposals and lawsuits. In return, SoluM committed to significant changes: making its board majority-independent, creating fully independent committees for key decisions, and neutralizing the voting power of controversial preferred shares. This deal directly tackles concerns that the company's leadership was trying to entrench its control.
So, what led to this breakthrough? The story unfolds in three key steps.
First, the trigger was a capital raise in June 2025. SoluM issued KRW 120 billion in Redeemable Convertible Preference Shares (RCPS). While raising money is normal, investors grew concerned that features of these shares, like call options for the CEO, were designed to protect the controlling shareholder's influence rather than benefit all shareholders. This sparked the initial backlash.
Second, an activist fund stepped in. Align Partners saw an opportunity to unlock value. They built a significant stake in SoluM, filed lawsuits to nullify the RCPS issuance, and publicly proposed their own independent directors. This multi-pronged pressure campaign made it difficult for management to ignore the issues, especially with the annual general meeting approaching.
Finally, the timing was perfect due to a changing environment. The Korean government's 'Corporate Value-Up Program' has been pushing companies to improve governance and shareholder returns. More importantly, amendments to the Commercial Act in July 2025 strengthened the rights of minority shareholders and made it easier to elect independent directors. This legal tailwind gave Align significant leverage in their negotiations.
This settlement is more than just a company-specific event; it's a powerful example of how shareholder activism, backed by regulatory reforms, is starting to address the long-standing 'Korea Discount'. The focus now shifts from negotiation to execution, as investors watch to see if these promises translate into real, lasting change.
- Redeemable Convertible Preference Shares (RCPS): A type of hybrid security that pays dividends and can be converted into common stock. In this case, their voting rights and terms were a source of conflict.
- Corporate Value-Up Program: A government-led initiative in South Korea aimed at encouraging listed companies to improve corporate governance and shareholder returns to tackle the "Korea Discount."
- Korea Discount: A term referring to the tendency for South Korean companies to have lower market valuations compared to their global peers, often attributed to issues like weak corporate governance and low dividend payouts.