"We will focus our supervisory capabilities to strengthen corporate responsibility management and protect shareholder interests, and we will pursue this 'steadfastly and consistently' regardless of any political or economic circumstances."
On the 12th, Lee Bok-hyun, Governor of the Financial Supervisory Service, made these remarks at the 'Asking the Direction of Amendments to the Commercial Act and the Capital Markets Act: Expert Roundtable' held at the Bulls Hall of the Korea Financial Investment Association in Yeouido, Seoul. The seminar, hosted by the Korean Financial Law Association, was attended by Kim Hak-seok, President of the Korean Financial Law Association, Lee Kwan-hoo, Director of the National Assembly Legislative Research Office, and others.
He stated, "The government has continuously strived to prepare reasonable improvement measures with the recognition that strengthening the protection of common shareholders is urgent as a cornerstone for value-up of the capital market and resolving the Korea discount," adding, "As a specific methodology, we considered amendments to the 'Commercial Act' and the 'Capital Markets Act' to seek ways to minimize side effects if they fit our legal system and actual conditions."
Regarding the amendment of the Commercial Act, he said, "The introduction of directors' fiduciary duties to shareholders raises issues from the perspective of consistency with the existing 'Commercial Act' system," and "There are also opinions that a cautious approach is necessary considering unforeseen side effects in the management field due to the broad scope of application of the Commercial Act."
Addressing views that the current fiduciary duties under the law are sufficient since the company and shareholders should not be viewed separately, he explained, "The position of our courts separates the company and shareholders concerning directors' liability to the company (Article 399 of the Commercial Act)," and "Regarding directors' liability to third parties (Article 401 of the Commercial Act), there is a tendency to regard shareholder damage accompanying company losses as indirect damage, which has been criticized as a vulnerability in shareholder protection."
Regarding the amendment of the Capital Markets Act, he said, "There seems to be broad consensus on the need to amend provisions of the Capital Markets Act, which specifically regulate organizational restructuring transactions such as mergers and physical divisions of listed companies, in a direction that strengthens shareholder protection."
However, he emphasized, "There are coexisting views that governance matters of listed companies should be regulated more strictly through the Capital Markets Act and that they should be left to the general law, the Commercial Act," adding, "Sufficient social discussion, consensus building, and supplementary efforts must follow."
He said, "Despite recent changes in the domestic and international economic and financial environment, we must not miss the opportunity for capital market reform, and it is time to bring various improvement proposals to the discussion table to reach constructive agreements," adding, "The advancement of the capital market and strengthening of shareholder protection must move beyond rhetoric to the stage of implementation."
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