The environment for activist investing in South Korea is improving because the “Korean Discount” has received lots of publicity, more foreign investors are buying into Korean corporations and insider family control is splintering, Kobre & Kim LLP co-founding partner Michael S. Kim said.

“Korean shareholders of these companies who are residents of Korea and Korean nationals including institutional investors, shareholder activists, are getting a lot more sophisticated,” Kim told the Activist Investing Today podcast. “We are more than three generations from the founding of these companies, so shareholdings themselves have been disbursed to lots of different branches of the families. You no longer have the one patriarch of the family who controlled everything.”

Kim explained why two different Samsung-related activist campaigns over the years shows how the situation for activist investors in Korea is improving, and he discussed “significant legal reforms” implemented recently by the Korean government producing more shareholder rights for minority investors.

Kim added, however, that activists, including U.S. insurgent managers, still face a lot of pushback in a way that can’t easily be addressed by legal reforms or foreign activists.

“As time went by and as more nonfamily shareholders bought into these companies, including many foreign investors, you still have a significant reluctance to let go of the control even though formalistically these families shouldn’t control these companies in terms of voting power,” Kim explained. “What keeps persisting is something that no legal reform can address. Even if a chaebol family doesn’t have voting control, they still have relationships with many directors and people in management and can influence behavior in a way that is very difficult for laws and foreign investors to counteract. That is still persistent.”

Beyond Korea activism, Kim also discussed his work advising Bill Browder, a noted critic of Russian President Vladimir Putin.

Check out the podcast with Michael Kim below:

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