iM Securities analyzed that if the duty of loyalty for directors is introduced, holding companies like Doosan will benefit the most. They raised Doosan's target stock price from the previous 265,000 won to 350,000 won and suggested an investment opinion of 'buy.' On the most recent trading day, 3rd, Doosan's closing price was 289,500 won.
On the 6th, Lee Sang-heon, a researcher at iM Securities, noted, "If the duty of loyalty of directors is enacted, it will change the agency cost structure from controlling shareholders to minority shareholders" and added, "This could soon create an opportunity for outside directors to break free from the controversy of being mere vote counters."
The duty of loyalty to shareholders means that under the current commercial law, the target for which directors must be loyal is the company, but the proposal is to amend the law to expand the loyalty target to shareholders. The market expects that if the commercial law is amended in this direction, decisions within the board of directors could lead to better governance.
The researcher pointed out, "In the case of a holding company like Doosan, there is a high possibility of a conflict of interest arising between the controlling shareholders and minority shareholders due to the unavoidable liquidity discount from the dual listing of the holding company and its subsidiaries." He emphasized, "If the duty of loyalty of directors is introduced, holding companies like ours will benefit the most in terms of governance improvements."
Improvements to the treasury stock system are also welcome news for Doosan shareholders. Acquiring treasury stock is recognized as a typical method of returning profits to shareholders in cash, along with dividends. However, in South Korea, there have been issues, such as treasury stocks being misused as a means to strengthen the controlling shareholder's power.
Recently, with the amendment of the capital markets law, restrictions have been implemented such as prohibiting the allocation of new shares for treasury stocks in the case of spin-offs or mergers, requiring disclosure of plans when holding treasury stocks exceeds 5% of the total issued shares, strengthening disclosure requirements for all treasury stock disposals by listed companies, and enhancing disclosure related to the acquisition and disposal of treasury stock trusts.
The researcher projected, "If the board of directors reviews the appropriateness of the proportion of treasury stocks and publicly discloses future treasury stock handling plans along with the business report, there will be an effect in restraining the misuse of treasury stocks as a means of controlling shareholders."