South Korea's food industry is entering the season for regular annual general meetings, with governance restructuring and securing future growth drivers emerging as key themes this year. Ahead of the revised Commercial Act taking effect, companies are pressing ahead with owner reappointments and management succession work while also speeding up business diversification and overseas expansion strategies.

According to the industry on March 20, food companies began holding regular annual general meetings starting with Lotte Chilsung Beverage on March 19. Major food companies are set to hold meetings in succession: Nongshim and Lotte Wellfood on March 20, CJ CheilJedang on March 24, and Dongwon Industries, Daesang, Binggrae, Samyang Foods, Shinsegae Food, SPC Samlip, Ottogi, Orion, HiteJinro on March 26, followed by Namyang Dairy Products on March 27.

A key theme for this year's meetings is corporate governance restructuring in response to the revised Commercial Act. Under the amendment, listed companies with assets of 2 trillion won or more cannot exclude cumulative voting through their articles of incorporation, and regulations such as expanded separate elections of audit committee members apply. Mandatory implementation is in September, but companies plan to respond pre-emptively by revising their articles at regular annual meetings.

Lotte Wellfood, CJ CheilJedang and Binggrae are moving to change their articles to reflect cumulative voting. Cumulative voting is a system that allows minority shareholders to concentrate their voting rights on a particular director candidate. Many companies have previously included exclusion clauses stating they would not apply cumulative voting in order to defend management control.

A trend of strengthening owner management has also continued. Companies including Lotte Wellfood, Ottogi and Orion put agenda items to reappoint owners as inside directors. Lotte Wellfood will reappoint Lotte Group Chairman Dong-bin Shin (신동빈) as an inside director. Orion is pushing to reappoint Vice Chairman In-chul Hur (허인철) and Ottogi is seeking to reappoint Chairman Young-joon Ham (함영준) as inside directors. This is interpreted as reflecting a judgement to maintain organisational stability through owner-centred leadership as domestic and external management uncertainty grows.

There are also moves to strengthen owner-led management succession. Nongshim put forward an agenda item to newly appoint Vice President Sang-yeol Shin (신상열) as an inside director, while Daesang submitted an agenda item to reappoint Vice President Sang-min Lim (임상민) as an inside director. In Nongshim's case in particular, an assessment has emerged that the owner third-generation management system has become more concrete with Shin joining the board.

Shin is the grandson of Chun-ho Shin (신춘호), the founder of Nongshim, and the eldest son of Chairman Dong-won Shin (신동원). Shin joined Nongshim in 2018 and was promoted to vice president after 7 years, and is expected to be newly appointed as an inside director at this year's annual meeting. Shin is reported to be overseeing a broad range of work, including mid- to long-term strategies such as 'Vision 2030' that contain goals including expanding the overseas sales share to 60 percent.

As third-generation owners enter boards in earnest, demands for responsible management and proof of performance are also expected to grow.

Agenda items also reflected business restructuring and management efficiency efforts. SPC Samlip submitted an item to change its name to 'Samlip'. This is seen as a move to change the name in line with efforts to reorganise the group system after the launch of holding company Sangmidang Holdings earlier this year.

SPC Samlip also plans to strengthen its responsible management system by appointing Do Se-ho (도세호), chief executive of Sangmidang Holdings, and In-ho Jung (정인호), chief executive of Nongshim Kellogg, as co-CEOs. SPC Samlip had initially planned to appoint CEO Beom-su Kim (김범수) and Vice President Gyeong-je Hyeong (경제형) as co-CEOs, but through a resolution to convene a shareholders' meeting it designated Do and Jung, a former chief executive of Nongshim Kellogg, as co-CEOs.

Companies are also accelerating diversification. As sluggish domestic demand prolongs growth stagnation, the need is growing to secure future growth engines by strengthening overseas market targeting and finding new growth areas.

Daesang submitted an agenda item to add to its business purpose 'the acquisition, management, licensing and sale of intangible assets such as intellectual property (IP)' to expand its business. Sempio Foods added business purposes including liquor export, and the production, processing, distribution and sale of agricultural, fishery and livestock products and health functional foods, as well as distribution related to e-commerce, in preparation for the possibility of expanding new businesses. The company explained the background as preparing for the possibility of expanding new businesses.

With a judgement that there are limits to growth with existing core businesses alone, the possibility is being raised that the pace of business portfolio reshuffling by food companies could accelerate.

This year's annual meetings in the food industry are interpreted as a period when governance reform, adjustments to owner-led systems and expansion of new businesses are intertwined at the same time. With sluggish domestic demand, cost burdens and the task of expanding overseas markets overlapping, attention is focused on what solutions each company will put forward.

An industry official said, "Ahead of the revised Commercial Act taking effect, companies are moving pre-emptively to revise their articles of incorporation and reorganise board structures." The official added, "In the food industry, the need to expand overseas markets is high, and with a judgement that there are limits with existing core businesses alone, moves to reshuffle portfolios and discover new businesses will also become more pronounced."