Democratic Party Holds 'Fiduciary Duty to Shareholders' Forum in National Assembly: "Proportional Benefits Must Be Guaranteed"

Representative O Gi-hyeong "Must Achieve Results in Practical Institutionalization"
Professor Lee Sang-hoon "Is Everything Justified If It Benefits the Company?"

The Democratic Party's 'Republic of Korea Capital Market Revitalization Task Force (TF)' held a forum at the National Assembly to explore ways to guarantee shareholders' proportional interests. The term 'proportional interests' of shareholders means that each shareholder should enjoy equal control rights and equity value in the company according to their respective shareholdings.

On the morning of the 8th, the TF held a forum titled "Fiduciary Duty of Directors: Institutional Improvement Measures to Guarantee Shareholders' Proportional Interests" at the National Assembly Members' Office Building. Participants focused their discussion on expanding the fiduciary duty of directors from the 'company' to the 'company and shareholders.' Kim Nam-geun, a member of the TF and National Assembly member, chaired the forum. The presentation was delivered by Professor Lee Sang-hoon of Kyungpook National University Law School, who supported the expansion of fiduciary duties.

On the 8th at 10 a.m., Democratic Party lawmakers O Ki-hyung, Kim Nam-geun, Kim Hyun-jung, and Kim Young-hwan attended the "Discussion on Institutional Improvement Measures to Ensure Proportional Benefits for Shareholders" held at the National Assembly Members' Office Building. Photo by Oh Ji-eun

TF leader Oh Ki-hyung said, "Financial Supervisory Service Governor Lee Bok-hyun also actively participated in discussions on protecting minority shareholders, including fiduciary duties under the Commercial Act, until August," adding, "It is time to see to what extent the common denominators across various sectors can be realistically institutionalized during the legislative process in the National Assembly." He further stated, "The Democratic Party will make every effort to achieve results within this National Assembly session." This regular session runs until December 10.

Assembly member Kim Hyun-jung said at the forum, "The core of advancing the stock market is protecting individual investors and establishing transparent governance," adding, "There are extreme claims that if fiduciary duties are expanded to shareholders, it would be difficult for the company to make any decisions. Because of such concerns, the Democratic Party proposed an amendment to the Commercial Act to introduce 'fair duty'." She continued, "Our goal is to complete legislation within this year," and added, "We will do our best to reflect the logical backgrounds provided by experts."

Professor Lee argued in his presentation that proportional interests must be guaranteed for all shareholders. He said, "It is insufficient to protect all shareholders' interests without the phrase 'proportional interests,'" and added, "Even if the merger ratio is low, if the company's scale grows broadly, it will become difficult to check." He also questioned, "Does everything become justified if it is for the company?" and said, "No one would be able to raise objections."

The TF plans to hold two more forums related to governance improvement at the National Assembly in the future.