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Stocks became a fast-rising search term in South Korea as news reports highlighted overseas interest in Korean equities, assessments of the domestic market, unclaimed dividends and paper certificates, fractional-share trading and changes in the stock wealth of major business leaders.
What owning a stock means under Korean law
A stock represents both a proportional unit of a corporation’s capital and the investor’s status as a shareholder. Although the word is commonly used to describe a physical or electronic security, South Korea’s Commercial Act distinguishes the ownership interest itself from a share certificate documenting it.
A corporation’s capital is divided into equal units, allowing one investor to hold multiple shares. Share ownership carries financial rights, such as receiving dividends, as well as voting and other corporate governance rights. Those shareholder rights generally transfer together with the stock rather than being sold, pledged or seized separately.
Korean law permits both par-value and no-par-value shares. Par value is a nominal amount assigned to a share and does not necessarily reflect its market price. For par-value shares, each share must have the same stated value of at least 100 won. Before a 1998 revision of the Commercial Act, the minimum was 5,000 won; lawmakers lowered it to make stock splits and corporate fundraising easier.
No-par-value shares do not state a fixed face amount and instead represent a proportion of a company’s capital. The structure is intended to provide flexibility in raising equity, though it can also raise concerns about fraud and whether companies are maintaining sufficient capital.
Protections for minority shareholders
South Korean law gives investors holding specified ownership stakes additional powers intended to curb abuses by controlling shareholders or corporate directors. Depending on the right involved, shareholders may need to hold at least 1%, 3%, 5% or 10% of a company’s outstanding shares.
These rights can include seeking a company’s dissolution, requesting a shareholder meeting, inspecting accounting records, seeking the removal of directors or liquidators, requesting an examination of a company’s operations and financial condition, and asking a court to stop unlawful conduct by directors. Requirements are generally less stringent for listed companies under provisions adopted in 2009, and corporate bylaws may lower the thresholds further.
Unclaimed assets and fractional trading
The Korea Securities Depository launched a campaign to find the owners of 45.1 billion won in dormant dividends and other proceeds, along with 2.32 million shares tied to unclaimed physical stock certificates. Separately, iM Securities began offering fractional trading in Korean stocks, allowing investors to buy portions of shares rather than whole units.
Other market reports showed that the combined stock wealth of South Korean corporate group leaders fell by more than 18 trillion won in the third quarter. Seo Jung-jin recorded the largest increase among the executives reviewed.
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