Economic 3 Organizations' 'Corporate Value-Up Seminar' on the 26th
Discussion on Revising Article 382 of the Commercial Act 'Duty of Loyalty of Directors'
Lee Bok-hyun, Who Raised 'Abolition of Breach of Trust Crime'... Continues Public Debate
On the 26th, Lee Bok-hyun, Chairman of the Financial Supervisory Service, stated in a back briefing after the "Corporate Value-Up Governance Improvement Seminar" jointly hosted by the Korea Listed Companies Association, KOSDAQ Association, and Korea Economic Federation at the Listed Companies Hall in Mapo-gu, Seoul, that he will continue to gather opinions for the amendment of the Commercial Act. [Image source=Yonhap News]
On the 26th, Lee Bok-hyun, Governor of the Financial Supervisory Service, stated regarding the discussion on amending Article 382 of the Commercial Act, 'Duty of Loyalty of Directors,' aimed at resolving the Korea Discount (undervaluation of the Korean stock market), "There is a consensus that we must not miss the golden time when discussions on capital market-related issues such as inheritance tax and financial investment income tax (capital gains tax) take place in the second half of this year," and announced plans to continue gathering opinions.
After the 'Seminar on Improving Corporate Governance for Corporate Value-Up' held that day, Governor Lee said in a back briefing, "The problems in Korean corporate governance are intertwined with somewhat excessive corporate regulations and tax issues such as inheritance tax, which distort and hinder corporate dynamism and suppress creative corporate activities."
He added, "Whether it is the National Assembly's Legislation and Judiciary Committee or the Political Affairs Committee, before the National Assembly resumes, we will strive to quickly gather opinions together with the business community and academia."
Governor Lee has taken the lead in creating a forum for public discussion on the amendment of the Commercial Act. On the 14th of this month, he held a briefing on the 'Commercial Act amendment issue' and made a bold claim that the abolition of the crime of breach of trust should be considered together during the amendment process related to the 'duty of loyalty of directors.' This was a proposal to persuade the business community opposing the amendment by suggesting the abolition of the criminal punishment related to breach of trust.
When asked about follow-up developments regarding the abolition of the breach of trust crime, Governor Lee replied, "There was discussion at today's seminar and other forums about the issue of how to enhance predictability and transparency in the current situation where excessive criminalization is being considered by the business community," and added, "We plan to gather opinions."
Regarding other ways to persuade the business community, he explained, "We are conducting seminars like today’s, various public and private meetings, expert consultations, and simulation analyses to assess market effects," and stated, "There is no disagreement among various stakeholders on the awareness of the need to resolve problems related to inheritance tax and corporate succession."
He further said, "For example, if there are misunderstandings or no problems regarding very exceptional transactions related to capital transactions or some profit and loss transactions raised by our individual investors and foreign investors, those issues should be resolved," and added, "If these are not simple misunderstandings but are reasonable and legitimate, the purpose of today’s seminar is to build consensus on how to address them."
He continued, "If someone argues that nothing should change and the status quo should be maintained, we believe that argument must also have clear grounds," and said, "From the perspective of our authorities, who are partners in government administration and responsible for the national market, we think it is very important to reflect their interests and opinions."
Regarding the plan to apply the expansion of the duty of loyalty of directors starting with listed companies, he said, "I am aware that academia argues that since the Commercial Act is a general law, it is too broad and that it is appropriate to apply it to listed companies, but no direction has been decided within the government," and added, "As the Deputy Prime Minister mentioned, we feel the need to gather opinions on enhancing economic dynamism as a means."
Meanwhile, the seminar jointly hosted by the three economic organizations (Korea Listed Companies Association, KOSDAQ Association, and Korea Economic Research Institute) on the same day was arranged as a counterbalance to the 'Corporate Governance for Capital Market Advancement' policy seminar jointly hosted by the Korea Capital Market Institute and the Korean Securities Association on the 12th. While the previous seminar viewed the Commercial Act amendment issue from the perspective of investors, this event was organized to examine the issues from the perspective of corporations.
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