The government and the ruling party are pushing a plan to allow only one reappointment of a financial holding company chair and to require a special resolution at the shareholders meeting for any reappointment. Currently, there are no rules on the number of reappointments or terms, allowing most financial holding chairs to secure a third term and stay in power long term.
According to the financial authorities on the 2nd, the Financial Services Commission and the Financial Supervisory Service are discussing ways to improve the CEO appointment process at financial holding companies through the "governance advancement task force (TF)." The government and the Democratic Party of Korea are said to be reviewing a plan to ban a third term for financial holding company chairs and to limit their terms. The idea is to limit reappointment to one time and terms to three years, guaranteeing a maximum six-year tenure for a financial holding chair. The current Act on Corporate Governance of Financial Companies has no provisions regarding a representative director's reappointment or term.
They are also discussing a plan to require a special resolution at the shareholders meeting even for a single reappointment. Currently, a reappointment agenda item for a financial holding chair is an ordinary resolution, which passes with a majority of the voting rights of attending shareholders and attendance by at least one-fourth of the total number of issued shares. If it becomes a special resolution, at least one-third of the total number of issued shares must be present, and at least two-thirds of those must approve for it to pass. Assuming 100% shareholder attendance at the meeting, chair reappointment would be possible only with 67% approval.
If the financial authorities' reform plan is introduced, sweeping changes are expected in the chair systems at major financial holding companies, including KB Financial, Shinhan Financial Group, Hana Financial Group and Woori Financial Group.
The government and the ruling party have reached a consensus on specifying these measures in the Act on Corporate Governance of Financial Companies, but the TF is said not to have discussed concrete plans yet on banning a third term for financial holding company chairs. The financial authorities plan to draw up governance improvement measures for financial companies by the end of March through the TF.