Hanjin KAL:
First Place
Can Mean
Fewer Votes

Under the amended Commercial Act, effective July 23, 2026, the largest shareholder must aggregate the holdings of related parties and may exercise no more than 3% of voting shares when electing or dismissing audit committee members. Other shareholders are subject to a separate 3% cap per holder. The restriction does not apply to ordinary director elections^{7, 8}.

What matters

• Only the second-ranked group can vote above 3% in aggregate. Delta Air Lines (14.90%), KDB (10.58%) and the National Pension Service (5.11%) are each separately limited to 3% in audit committee elections. KDB is disclosed as a joint holder with the Cho group, but is not a related party and has no agreement delegating its voting rights, so its stake is not aggregated with Cho's (Hanwha Investment & Securities)^{8, 9}.
• Foundation votes depend on how the ceiling is applied when Cho ranks second. The Jungseok-Inha Educational Foundation, Jungseok Logistics Foundation and Ilwoo Foundation (combined stake: 3.18%) are generally barred from voting under the Fair Trade Act. They may vote on certain matters, such as director appointments, only if their combined voting rights with those of other related parties stay within 15%^{10, 11}. If Hoban remains No. 1 on the record date, two results follow depending on the basis used to apply the 15% ceiling:
  • If the ceiling is tested against the other 16 holders' underlying 17.40% stake, they already exceed 15%; the foundations receive no votes → 11.85%.
  • If the ceiling is tested against the 11.85% of votes actually exercisable after the individual 3% caps, another 3.15 percentage points are available → 15.00%.
  At this March's AGM, when the Cho group ranked first, Hanjin KAL restricted all three foundations' votes on every resolution². The company has not disclosed how it would treat them if the group ranked second.
• The record-date shareholder register normally determines the ranking. The statute does not specify when the largest shareholder must be identified; in practice, the shareholder register as of the AGM record date is usually used (Hanwha Investment & Securities)⁸. Article 13(1) of Hanjin KAL's articles of incorporation grants voting rights at the AGM to shareholders registered on December 31². With the exchange closed on Dec. 31 and equity settlement taking two business days (T+2), on-exchange purchases must be executed by Dec. 28 to appear on that register.

That makes the year-end ranking critical

If the Cho group retakes first place, Hoban's aggregate eligible votes would rise to 6.85% and the Cho group would be capped at 3%. Because Chairman Cho's personal stake (5.79%) already exceeds the individual 3% limit, the contracted shares would affect the ranking—but not his group's audit committee votes—so long as Hoban remains No. 1.

Assumptions behind the numbers The 11.85–15.00% range assumes Hoban is the largest shareholder on the record date and all other holdings remain as disclosed on Nov. 4. Hanwha's 15.03% is also a fixed-holdings calculation, based on its Oct. 19 data and including all three foundations' stakes⁸.

Hanjin KAL has nine directors (two executive and seven independent), the maximum permitted by its articles of incorporation. Three directors' terms expire each year. To replace a majority—at least five seats—solely through scheduled expirations would therefore take two annual general meetings^{2, 8}.

Next year's three seats were originally KDB nominations

• KDB's 2024 nominations: The terms of independent directors Bae Seong-rye, Hong Dong-pyo and Song Baek-hun expire next March. All three were appointed in 2024 following nominations by KDB, according to Invest Chosun and The Economy^{14, 15}.
• Nomination rights and voting obligations: Under a 2020 investment agreement, KDB secured the right to nominate three outside directors, including one separately elected audit committee candidate. Chairman Cho is obliged to vote in favor of those nominees^{2, 14}. The duration of the agreement has not been confirmed.
• KDB may nominate the replacements as well: Invest Chosun reported that many analysts expect KDB to nominate the next three directors too, provided it remains a shareholder¹⁴. The actual nominees and nominating parties will be identified in the notice convening next year's AGM. Hoban would need to put forward candidates through shareholder proposals or a request for cumulative voting.

What matters

• Companies can no longer opt out of cumulative voting: The Commercial Act amendment effective Sept. 10, 2026 bars listed companies with assets of at least ₩2 trillion from excluding cumulative voting through their articles of incorporation¹⁶. Hanjin KAL also removed its opt-out clause at its March AGM². A shareholder with at least 1% may request cumulative voting six weeks before the meeting, making it available from next March's AGM.
• About 30% is needed to guarantee one seat: When two directors are elected cumulatively, a shareholder needs more than one-third of the votes represented at the meeting to guarantee a seat. At this March's turnout (94%), that equates to roughly 30% of outstanding shares (Hanwha's estimate is about 31%)^{2, 8}. Neither group reaches that threshold on its own.
• Midterm replacement requires a special resolution: Removing a sitting director before term expiry, or amending the articles to add seats, requires approval by at least two-thirds of voting rights present and at least one-third of all issued shares^{8, 17}.

Eugene Investment & Securities sees scope for Hoban to gain some board representation next March if it shifts to actively pursuing management participation, but judges a board majority—and eventual control of Korean Air—to remain distant¹⁸. Hanwha Investment & Securities notes that a roughly 21% stake cannot guarantee a seat under cumulative voting; the outcome depends on how other shareholders allocate their votes⁸.

The 3% cap does not apply to ordinary director elections. Delta Air Lines (14.90%), Korea Development Bank (10.58%), the National Pension Service and other shareholders can determine the outcome (Hanwha Investment & Securities)⁸. KDB can support or oppose particular nominees without selling a single share; a stake sale and an AGM vote are separate decisions.

National Pension Service (5.11%) The NPS opposed Cho Won-tae's reappointment as an executive director at this March's AGM. The resolution nevertheless passed with 93.77% in favor^{2, 20}. That is why its votes should not be automatically assigned to either camp.

The commitments and numbers behind KDB's stake

Sources: Hanjin KAL semiannual report (Cho's contractual terms), iM Securities, DS Investment & Securities and reporting on the merger timetable^{2, 13, 21, 22}

How brokerages assess KDB and Delta

• Hanwha Investment & Securities (Nov. 4): Hanwha calculates that if Delta backs Cho, even Hoban's purchase of all KDB shares at a 30% premium (about ₩1.61 trillion) would leave it behind, 31.6% to 35.96%. Hoban would need to buy another 4.3 percentage points or more—costing around ₩510 billion at the Nov. 3 close—to pull ahead. It therefore sees continued open-market buying as more likely than a premium purchase of the KDB block. The signals to revisit the scenario are a KDB stake-sale announcement and Delta's filings on investment purpose or shareholding changes¹⁹.
• Hanwha Investment & Securities (Nov. 5): The brokerage argues that the underlying contest of votes—including Delta and KDB—does not change merely because the largest-shareholder ranking does. Even Hoban's 31.27% with KDB would be slightly below Hanwha's estimated 31.33% threshold for a guaranteed cumulative-voting seat at 94% turnout, requiring additional proxy support. It therefore expects the control premium to be determined more by negotiations over a block of Hoban shares (a privately negotiated large stake transfer) than by the eventual AGM ballot¹².
• DS Investment & Securities: DS reported that a KDB official said on Nov. 2 that completing the aviation restructuring was the priority. DS expects the bank to wait before selling and, if it exits, to favor an open competitive tender. A negotiated sale to one shareholder could prompt allegations that a state-owned policy bank had intervened to defend management control¹³.
• iM Securities: iM treats Delta, KDB, LX Pantos (3.83%) and Japan Airlines as shares potentially friendly to Cho, and regards KDB's stake as “conditional” while the merger of the two airlines—its original policy objective—is being completed. Once the merger is done, the public-policy case for retaining the stake may diminish. With a substantial unrealized gain, KDB may consider an exit, although iM expects a cautious approach to timing and method²¹.

Two benchmarks help assess that premium: the multiple of the value of Hanjin KAL's Korean Air stake (Eugene's approach), and the premium to net asset value—including subsidiaries and real estate (iM's approach).

What matters

• Nonvoting preferred shares rallied too: Hanjin KAL's nonvoting preferred shares climbed from ₩26,300 on Oct. 30 to ₩62,000 (the daily upper limit) on Nov. 5, a 2.4x gain¹. Demand to accumulate votes cannot by itself explain that move; takeover speculation and trading flows are both likely playing a role.
• The exchange issued an overheating warning: After the Nov. 4 close, the Korea Exchange gave advance notice that Hanjin KAL common and preferred shares might be designated as short-term overheated issues. If all price, turnover and volatility criteria are met within 10 trading days beginning Nov. 5, trading shifts to a single-price call auction every 30 minutes for three sessions. The preferred shares were placed on an investment-caution notice on Nov. 5 (advance notice of investment-warning designation) and were designated an investment-warning issue effective Nov. 6 after meeting conditions including a gain of at least 60% over five sessions. An investment-warning designation does not itself halt trading. A one-day suspension may follow if the price climbs another 40% or more over the two days after designation and remains above the pre-designation closing price²³.
• Each percentage point of ownership is becoming more expensive: A one-percentage-point stake (667,623 shares) is worth about ₩127.1 billion at the Nov. 5 close on a simple marked-to-market basis. iM's estimate at the Nov. 3 close was ₩117 billion²¹. Buying that many shares in the market could cost more as the price moves.
• Trading activity surged: Turnover including NEXTRADE reached ₩423 billion on Nov. 4, 72 times the ₩5.9 billion recorded on Oct. 30¹.

Eugene's view on Korean Air Eugene Investment & Securities sees Korean Air as the economic asset at the heart of the dispute. It highlights the prospect of enhanced shareholder returns and retains Korean Air as its top pick in aviation, citing solid passenger demand, strong cargo operations and a weaker dollar against the won (Buy; ₩35,000 price target as of Nov. 4)¹⁸.

The No. 1 shareholder group for audit committee voting is normally determined from the Dec. 31 register. Ownership reports, trade settlements, regulatory review and the AGM surround that date.

1. 11/4Completed
   Change-of-largest-shareholder filingHoban Construction and three related parties: 20.69%. This filing also served as the final response to the Nov. 2 “unconfirmed” clarification notice, eliminating the previously scheduled Dec. 1 follow-up^{3, 5}.
2. 11/10
   October ownership-change reporting deadlineReporting is required only if holdings changed by at least one percentage point. Hoban's Nov. 2 stake was 0.54pp above its July report (20.15%), so those figures alone would not trigger the requirement^{6, 24}.
3. 12/10
   November ownership-change reporting deadlineHoban must report by this date if its group stake reaches at least 21.15% during November^{8, 24}.
4. As needed
   Insider and major-shareholder ownership reportOfficers and major shareholders must report changes in their securities holdings within five days. A major shareholder is one that holds at least 10% of voting shares for its own account, or otherwise exercises de facto influence over management, including director appointments²⁵. On the percentage threshold alone, Hoban Construction (11.50%) is the only Hoban-group entity covered. All 359,379 shares added since July were acquired by Hoban Industry (0.71%), for which no separate ownership report was filed. Whether Hoban Industry must report cannot be decided from its percentage alone. Affiliate buying could therefore remain invisible in immediate ownership disclosures until the Hoban group's stake passes 21.15%. Chosunbiz cited experts raising the possibility of circumvention of reporting obligations, but no legal violation has been established^{6, 26, 27}.
5. As needed
   Delta Air Lines stake disposalAs a major shareholder, Delta is subject to advance trading-plan disclosure. If its planned trades plus trades in the previous six months amount to at least 1% of issued shares or ₩5 billion, it must file 30 days in advance. Certain transfer agreements involving a change in largest shareholder are exempt^{19, 28, 29}.
6. As needed
   Change in investment purposeA shift from passive investment to participation in management must be reported within five days²⁴. Hanwha cited a 2020 case in which a court restricted voting rights above 5% for a shareholder that belatedly reported a change of purpose after seeking director appointments¹².
7. From November
   KFTC business combination reviewHoban submitted a notification in October, according to reports. The statutory review period is 30 days from filing, extendable by up to 90 days if needed^{30, 31}.
8. 12/3~1/1
   Settlement of Cho's 325,000-share purchaseIndicative price ₩114,000 per share, or roughly ₩37 billion; seller undisclosed. The Nov. 2 advance trading-plan filing sets a trading window beginning Dec. 3, consistent with the 30-day advance notice rule^{4, 28}.
9. 12/16
   Korean Air–Asiana merger effective dateIntegrated Korean Air is scheduled to launch Dec. 17^{13, 21, 22}.
10. 12/31
    AGM record dateThe largest shareholder group for audit committee voting is normally established from this register. Exchange trades must be executed by Dec. 28 to settle in time^{2, 8}.
11. Mid-February 2027
    Cumulative-voting request deadlineThe AGM deadline is six weeks before the anniversary of the prior AGM (March 26), making Feb. 12 the relevant date^{8, 16}.
12. March 2027
    AGM · Three director seatsIncludes two audit committee members. The integration of the three low-cost carriers is also targeted for this month¹³.
13. March 2028
    AGM · Three director seatsFirst point at which scheduled term expirations could produce a change in the board majority.

Variable 1 may change next year's AGM agenda; Variable 2 affects the calculation of Cho's audit committee votes; Variable 3 affects ordinary director elections. Track Variables 1 and 2 through ownership filings and AGM notices, and Variable 3 through KDB stake disclosures and the AGM outcome.

Upcoming checks

• 11/10·12/10Hoban-group ownership disclosures and investment purpose
• From NovemberOutcome of the KFTC combination review
• After Dec. 3Settlement disclosure and seller of Cho's shares
• After Dec. 16KDB's stance on its stake following the merger
• As neededDelta filings on investment-purpose changes or proposed share trades
• As neededAny tender offer; parliamentary progress on the mandatory tender-offer bill (a signal identified by Hanwha)
• 11/19~Decision on lifting the investment-warning status of Hanjin KAL preferred (first review: Nov. 19)
• Jan.–Feb. 2027Dec. 31 shareholder register; cumulative-voting requests and shareholder proposals
• Feb.–Mar. 2027AGM notice: director nominees and nominating parties; treatment of foundation voting rights