Kim Soo-hyun, a researcher at DS Investment Securities, evaluated the passing of the commercial code amendment through the National Assembly on the 14th as a historical turning point for the Korean capital market. The core of the commercial code amendment is expanding the duty of loyalty of directors from companies to shareholders.
Kim pointed out issues that have occurred in the Korean capital market. Notable examples include the unprecedented structure of duplicate listings between holding corporations and subsidiaries, which were all created through human partitioning, and the recent declaration by LS to pursue initial public offerings (IPOs) for two core subsidiaries to support its business growth.
Kim noted, "It means seeking necessary funds from the capital market, but the development of the capital market itself, which actually needs to source money, is being overlooked."
Even amid concerns from the economic sector that the implementation of the amended commercial code could make IPOs for unlisted subsidiaries difficult and hinder capital procurement, Kim stated there are ways to address these issues. He said, "By increasing the stock price of the holding company and redistributing funds to the relevant subsidiaries through capital increases, it can be done," adding that "it is extremely rare for domestic holding companies to distribute resources to subsidiaries due to concerns over the decline of large shareholders' equity."
Kim predicted that even if the acting president exercises the right of request for reconsideration (veto), a national consensus centered around individual investors will be formed, leading to the inclusion of the commercial code amendment in the next presidential election pledge. He remarked that "a new era has begun, and management rights should be objects of verification of management capabilities and challenges, not protection," adding that "answers can be found in close Japan and the United States."