Lee Bok-hyun "Commercial Act Amendment Merely Declares Principle of Shareholder Protection Obligation"

Financial Supervisory Service, Korea Financial Investment Association, and Korea Listed Companies Association Hold Forum on Building Corporate-Shareholder Coexistence Governance
"Clarity and Predictability Should Be Enhanced Through the Presentation of Guidelines"

Lee Bok-hyun, Governor of the Financial Supervisory Service, recently pointed out that the amendment to the Commercial Act, which passed the Legislation and Judiciary Committee, only declares a principle-level duty to protect shareholders.

On the morning of the 13th, Lee attended the "Open Discussion for Building Governance of Corporate-Shareholder Coexistence" held at the Korea Economic Association Conference Center in Yeouido, Seoul, and stated, "The Commercial Act only declares a principle-level duty to protect shareholders, and it is necessary to examine whether it overlooks various issues that may arise during the actual amendment."

He emphasized, "To prevent corporate business judgments from becoming subject to excessive criminal judgment, clarity and predictability should be enhanced through the abolition of the special breach of trust crime or the presentation of guidelines," adding, "To minimize confusion in the corporate field, detailed procedures for implementing shareholder protection should be specifically established in the Capital Markets Act and other laws." He also added, "It is necessary to consider introducing appropriate safeguards for reasonable decision-making by the board of directors."

He further said, "Just as rice plants wither and die if pulled up to grow faster, I ask all stakeholders, including companies, shareholders, and authorities, to put their heads together and carefully deliberate to reach a balanced and precise conclusion."

At the same time, he stressed the need to actively respond to the demands of the times for capital market advancement and to strive to build shareholder-centered governance. Governor Lee explained, "We live in an era with 14 million individual investors. Enhancing corporate value and protecting shareholder rights are not just issues for the capital market but have already become national tasks."

He also said that activist institutions should work toward sustainable corporate growth. He explained, "Shareholder activism is actively carried out in major countries such as the United States, which is the center of the global capital market," adding, "In Japan, shareholder activist institutions are widely recognized as a key part of the market by not only inducing shareholder returns and advising on growth strategies but also actively participating in government reform tasks."

He continued, "We must consider that such shareholder activism can be a healthy catalyst for the capital market," and urged, "Companies should positively review their reasonable proposals from the perspective of maximizing shareholder interests."

He also said that exercising voting rights is an essential duty and core task of institutional investors and should be actively utilized. Governor Lee stated, "If institutional investors do not properly exercise their rights as shareholders, the checks and balances on corporate management will disappear, risking damage to investor interests," adding, "Asset management companies have often been criticized for neglecting their fiduciary duties by simply accepting proposed agendas as they are."

He added, "The Financial Supervisory Service will point out exemplary and inadequate cases of asset management companies' voting rights exercises and improve the operation of the Stewardship Code," emphasizing, "We will actively seek ways to strengthen the role of institutional investors as faithful monitors of corporate management and diligent trustees."

The discussion forum was jointly hosted by the Financial Supervisory Service, the Korea Listed Companies Association, and the Korea Financial Investment Association. It was the third open discussion for the advancement of the capital market.