Discussion on amending the Commercial Act reignited,
Lee Bok-hyun, head of the Financial Supervisory Service, commemorating the illegal youth gambling prevention declaration ceremony held at H-STAGE 1 of Hana Bank in Mapo-gu, Seoul on the morning of the 9th. Yonhap News,
, ‘[Seoul Economy]’,
,
, ‘On the 21st, Lee Bok-hyun, the head of the Financial Supervisory Service, stated, “The unique characteristics of Korean corporate governance and inadequate investor protection in the domestic stock market are being identified as obstacles to value creation.” He revealed that discussions on expanding directors’ fiduciary duties have rekindled interest as they have a significant impact on corporate law matters, investors, and the overall capital market.’,
,
, ‘On that day, the head of the Financial Supervisory Service invited five renowned corporate law experts in the country to a roundtable meeting on improving corporate governance and made the above remarks. The unique characteristics of Korean corporate governance identified by the head include low ownership by controlling shareholders, inadequate shareholder returns such as low dividends, and frequent infringement of the rights of ordinary shareholders.’,
,
, ‘The head mentioned, “Despite the prevailing view in the corporate law community that the interests of shareholders are included in the fiduciary duties towards the ‘company’ where their interests align, the reality is being operated differently.” He also expressed regret over ongoing cases of unfair mergers and public share value erosion following asset splits among some companies.’,
,
, ‘Furthermore, he pointed out the need to discuss fundamental improvements based on principles rather than individual regulatory measures for a thorough shift in corporate awareness. He also acknowledged concerns that the expansion of directors’ fiduciary duties could lead to excessive constraints on business environments due to the spreading of criminal issues such as embezzlement.’ The principle-centered fundamental improvement approach refers to incorporating shareholders into the target of directors’ fiduciary duties as stipulated in Article 382-3 of the Commercial Act.’,
,
, ‘On that day, corporate law experts suggested that specifying shareholder fiduciary duties would be meaningful for the protection of small shareholders. However, there were also opinions suggesting the need for caution when considering corporate legal systems such as delegation principles between companies and directors.’,
,
, ‘Regarding specific measures for protecting shareholder interests, proposals were made, including establishing a separate provision for ‘shareholder interest protection duty’ that defines procedures for ensuring fairness in situations of conflict of interest among shareholders. Various methods were suggested to address unfair ratio mergers, such as introducing a system for ‘merger retention rights or the appointment of merger inspectors to prevent mergers, allowing lawsuits for nullification of resolutions made by controlling shareholders pursuing their interests.”,
,