Controversy Over Doosan Group's Governance Restructuring
"A Move That Undermines Value-Up" Criticized
Reiteration of the Need to Discuss 'Duty of Loyalty of Directors'
Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), criticized the actions of companies that run counter to the government's value-up (corporate value enhancement) efforts on the 8th, stating, "It is regrettable that management practices prioritizing the interests of controlling shareholders are still being repeated."
On the 8th, during a meeting with CEOs of 23 asset management companies, Governor Lee emphasized, "To achieve a thorough change in corporate awareness, there needs to be a discussion on fundamental improvements centered on principles regarding the 'duty of loyalty of directors.'"
Recently, controversy arose in the market as Doosan Group implemented a restructuring of governance among its affiliates. Doosan Enerbility announced a restructuring plan to spin off an investment company holding all of its Doosan Bobcat shares (approximately 46%) and merge it with Doosan Robotics. Doosan Robotics will acquire the remaining Doosan Bobcat shares through a comprehensive stock exchange. In this process, the merger ratio for Doosan Bobcat, a 'cash cow,' was calculated unfavorably, leading to concerns that minority shareholders would suffer significant losses. The FSS also requested Doosan to amend its securities registration statement and to clearly disclose the merger synergies.
Governor Lee highlighted the active role and responsibility of asset management companies, key investors in the capital market, and conveyed three requests: ▲ implementation of stewardship code guidelines such as fiduciary duty and voting rights exercise ▲ establishment of market order including internal controls ▲ promotion of sound growth such as fair competition among exchange-traded funds (ETFs). The stewardship code is a principle for institutional investors to faithfully fulfill their responsibilities as fiduciaries.
He also stated, "The advancement of corporate governance should be established as a 'culture (文化),' a universally shared value and norm," adding, "To this end, we plan to hold meetings and open forums in August and September to actively build consensus necessary for the advancement of the capital market."
CEOs of asset management companies also shared various opinions and suggestions on corporate governance improvement, value-up, and capital market advancement. The management companies expressed expectations that the introduction of directors' duty of loyalty to shareholders would lead to improvements in corporate governance. However, some asset managers suggested that it is necessary to proceed while considering concerns raised by companies.
Regarding the financial investment income tax, asset managers pointed out the need for its 'abolition,' as it is expected to cause side effects such as reduced domestic investment by investors, capital outflow from the domestic stock market, and fund runs. They also conveyed opinions to the authorities on simplifying fund subscription procedures to revitalize the public fund market and providing tax benefits for long-term investments. Foreign asset management companies requested policy support to activate domestic entry and investment through global networks.
Governor Lee stated, "We will continue to communicate closely with the asset management industry and actively reflect the matters discussed at this meeting in our supervisory duties."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
