The National Assembly has begun discussing an overhaul of financial holding company governance, but people in the financial sector say it is uncertain whether a conclusion will come within the year. Several options are reportedly being floated to limit long-term consecutive terms for financial holding company chairs, including special resolutions at shareholders' meetings and tougher approval requirements at the chair candidate recommendation committee.
According to the financial sector on the 4th, the National Policy Committee of the National Assembly referred five amendment bills to the Act on the Corporate Governance of Financial Companies—covering consecutive terms for financial holding company chairs and governance improvements—to the Legislation Review Subcommittee in a package. Amendments to the governance act proposed by lawmakers Kim Hyun-jung and Park Hong-bae of the Democratic Party of Korea, among others, are currently pending in the National Assembly.
However, it is understood that they were not immediately included on the subcommittee's review agenda. The National Policy Committee plans to coordinate details at the subcommittee once the government's governance reform plan from the Financial Services Commission is fleshed out.
Democratic Party of Korea members on the National Policy Committee share a consensus that the process for consecutive terms of financial holding company chairs should be strengthened and governance should be overhauled. However, there is considerable disagreement over legally limiting a third consecutive term. Through recent closed-door party-government meetings and briefings from the financial authorities, issues such as a legal cap on a third term, special resolutions at shareholders' meetings, and tougher approval requirements at the chair candidate recommendation committee have reportedly been discussed.
A proposal requiring at least 75% approval by the chair candidate recommendation committee for a consecutive term, and unanimous approval for a third term, is also said to have emerged during these discussions. A National Policy Committee official said, "Nothing has been decided on the chair's consecutive terms, and we need to discuss it further."
Some in the financial sector predict a conclusion will not be reached during this regular session. The view is that discussions on the governance overhaul plan will proceed slowly, pushed back by major issues such as next year's budget bill, tax law revisions, and real estate policy. In fact, members of the National Policy Committee have yet to begin full-fledged coordination of views with the financial holding companies.
An official at a financial holding company said, "As far as I know, the National Assembly has not formally requested opinions on the governance overhaul plan," and added, "The board has been in ongoing communication with the financial authorities, but we have not been asked to provide views on the governance overhaul."