Academic Roundtable on Corporate Governance Improvement
On the 21st, Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), pointed out that "the uniqueness of Korean corporate governance and insufficient investor protection in the domestic stock market are identified as obstacles to value-up." He criticized the ongoing trends that go against value-up, such as low shareholding ratios of controlling shareholders, inadequate shareholder returns, and infringement on the stock value of common shareholders.
On the same day, Governor Lee held an "Academic Roundtable on Corporate Governance Improvement" at the FSS headquarters in Yeouido, Seoul, inviting academic experts in the field of commercial law, and made these remarks.
At the roundtable, the main topics discussed were the direction of amendments to the Commercial Act to include shareholders as subjects of directors' fiduciary duties and measures to improve corporate governance. Governor Lee said, "The majority of the academic community in commercial law holds the view that the interests of the company and shareholders are the same, and that shareholder interests are included in the 'company,' which is the subject of fiduciary duties."
He added, "Nevertheless, in reality, the operation differs from this, resulting in continuous cases where the interests of common shareholders are infringed, such as unfair mergers by some companies and listings after physical division." He emphasized, "There is a need to discuss fundamental improvement measures centered on principles rather than individual regulatory methods to ensure a thorough change in corporate awareness."
Regarding industry opinions that expanding directors' fiduciary duties might excessively expose companies to litigation risks such as criminal charges for breach of trust, he said, "We take seriously the concerns that expanding directors' fiduciary duties could escalate into criminal issues, excessively constraining the management environment."
In response to criticism about whether it is appropriate for the FSS to take a central role in discussions on amendments to the Commercial Act, he stated, "Although it concerns the Commercial Act, since it can significantly impact investors and the overall capital market, the Financial Supervisory Service, as the capital market supervisory authority, cannot help but take an interest."
He added, "Going forward, we will continue to gather opinions from various sectors on desirable corporate governance improvement measures and maintain close communication with the relevant ministries."
Meanwhile, the commercial law experts at the meeting largely agreed that "although protecting shareholder interests by directors under the Commercial Act is natural, some precedents deny this, so explicitly stating directors' fiduciary duties to shareholders is meaningful."
Regarding the proposal to limit directors' liability by abolishing the crime of breach of trust, opinions were divided between those who considered it premature and those who argued that criminal liability should be converted to civil liability through measures such as abolishing special breach of trust crimes.
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