Capital Market and Securities Society Seminar… Suggestions on Concentrated Voting System and Mandatory Public Tender Offer System
Korea Listed Companies Association: “The Meaning of Shareholder Fiduciary Duty is Ambiguous… Should Be Reviewed Carefully”
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Seminar on corporate governance for capital market advancement
(Seoul=Yonhap News) Reporter Kang Min-ji = A seminar on corporate governance for capital market advancement is being held at the Financial Investment Association in Yeongdeungpo-gu, Seoul on the morning of the 12th. 2024.6.12 [email protected]
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, “(Seoul=Yonhap News) By Reporter Lee Dong-hwan = Suggestions have been made to expand the fiduciary duty of directors to include shareholders to resolve the ‘Korea Discount’ issue, and to expand the concentrated voting system when appointing directors,”
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, ” Professor Na Hyeon-seung of Korea University’s Business Administration Department stated this at the ‘Corporate Governance Seminar for Capital Market Advancement’ held at the Finance and Investment Center in Yeouido on the 12th.”
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, ‘ Co-hosted by the Capital Market Institute and the Korea Securities Society with sponsorship from the Financial Supervisory Service, this seminar is a procedure for gathering opinions before the government’s amendment to the Commercial Act.’
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, ‘ In the presentation, Professor Na proposed measures such as ▲ amending the Commercial Act to include shareholders in the fiduciary duty of directors ▲ separation of all audit committee members upon appointment ▲ expansion of the concentrated voting system when appointing directors to enhance the independence of the board of directors and empower shareholders.’
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, ‘ Article 382-3 of the current Commercial Act requires directors to faithfully carry out their duties for the company, but does not impose the same duty on ordinary shareholders.’
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, ‘ The concentrated voting system is a mechanism that grants voting rights not by one vote per share at general meetings, but by the number of directors being appointed, seen as a sort of protection for minority shareholders’ rights.’
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, ‘ Professor Na also suggested expanding disclosure of executive compensation to increase shareholders’ access to information and strengthening shareholders’ voting rights at general meetings regarding executive compensation and compensation policies.’
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, ‘ Furthermore, to enhance shareholder control over related-party transactions, he proposed measures such as ▲ expanding the disclosure of related-party transactions ▲ relaxing the criteria for disclosure ▲ strengthening disclosure standards ▲ activating activist funds ▲ introducing recommendatory shareholder proposals.’
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, ‘ He also emphasized the need to ensure existing shareholders’ rights to purchase stocks during a company’s sale of treasury stocks, and the introduction of mandatory public tender offer rules in the event of corporate acquisitions.’
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, ” Professor Na highlighted that undervaluation of stock prices due to infringement on the rights of minority shareholders is a core factor of the ‘Korea Discount’.”
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, ‘ Kim Woo-jin, a professor at Seoul National University’s Business School, also emphasized the need to introduce the fiduciary duty of directors toward shareholders, pointing out that the key issues of corporate governance in domestic listed companies include conflicts of interest among shareholders and transfer of wealth under company law-related issues.’
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, ‘ It is pointed out that the Fair Trade Act has mainly regulated this issue so far, showing its limitations.’
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, ‘ In his presentation, Professor Kim explained, “Companies that engaged in self-dealing have circumvented regulations under the Fair Trade Act,” saying that through this amendment to the Commercial Act, a level of complete fairness similar to that of the United States should be demanded in situations where there are conflicts between controlling shareholders and ordinary shareholders in self-dealing.’
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, ‘ However, he stated, “There is a tendency in some quarters to misunderstand conflicts between shareholder interests and company interests,” and said that for strategic management decisions, such as capital distribution and new investments, free from shareholder conflicts, principles of management judgment should be recognized.’
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, ‘ In cases of general management situations without conflicts of interest, he mentioned that if the duty of care is fulfilled, it is possible to be exempt from liability for investment failure, saying that fears are merely groundless rumors.’
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, ‘ Hwang Hyun-young, a research fellow at the Capital Market Institute, emphasized the importance of strengthening shareholder rights in the appointment of directors, suggesting measures such as ▲ notifying shareholders of general meeting information using KakaoTalk ▲ dispersing general meeting dates ▲ submitting audit reports when sending meeting notices.’
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, ‘ Hwang stated, “To find out the general meeting date, minority shareholders have to constantly check the disclosure system,” pointing out that listed companies can circumvent individual notifications for shareholders holding less than 1% of shares by using public disclosures.’
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Dialogue between Lee Bok-hyun and Lee Jun-seo
(Seoul=Yonhap News) Reporter Kang Min-ji = Lee Bok-hyun, second from the left, Director of the Financial Supervisory Service, and Lee Jun-seo, President of the Korea Securities Society, are conversing at the ‘Corporate Governance Seminar for Capital Market Advancement’ held at the Financial Investment Association in Yeongdeungpo-gu, Seoul on the morning of the 12th. 2024.6.12 [email protected]
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, ‘Follow-up panel discussions raised concerns from the management sector.’
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, ‘ Kim Chun, Director of the Korea Listed Companies Association, said, “Introducing the fiduciary duty of directors toward shareholders is ambiguous in meaning and difficult to operate as a standard for director actions in specific situations, so it should be carefully reviewed.”‘
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, ‘ On the other hand, Cheon Jun-beom, Vice-Chairman of the Korea Corporate Governance Forum, emphasized, “Over the past 20 years, our legal system has failed to address the weak governance issues, the core cause of the Korea Discount,” stressing that the specification of directors’ fiduciary duty to shareholders is the first step toward advancing the capital market.’
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, ‘ Jeong Eun-jeong, Director of the Legal Affairs Office at the Financial Supervisory Service, said, “With the introduction of the fiduciary duty toward shareholders, it is necessary to reach social consensus on the legalization of principles of management judgment to prevent excessive expansion of directors’ responsibilities.”‘
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, ‘ Meanwhile, the Korea Listed Companies Association, KOSDAQ Association, and Korea Federation of Economic Leaders are planning to host a seminar on corporate governance improvement, including the improvement of the directors’ liability system, on the 26th to gather opinions from listed companies.’
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, ‘ [email protected]’
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