The Democratic Party of Korea emphasized that corporate governance reform is a key task in line with the recent surge in the KOSPI index and stated that it will accelerate the second amendment to the Commercial Act, which centers on expanding the separate election of audit committee members.
Chairperson Jin Sung-joon of the Democratic Party noted during a strategy meeting held at the National Assembly on the 15th, "Since the launch of the Lee Jae-myung government, the KOSPI's rising rally has continued. The KOSPI index has broken through 3200 for the first time in 3 years and 10 months," adding that, "JP Morgan projected that if Korea's corporate governance reform gains momentum, the KOSPI index could reach 5000 within the next two years, and Macquarie assessed that this rally is the beginning of a structural growth over the next 10 years, rather than a short-term economic recovery."
He also emphasized, "This once again shows that corporate governance reform must be in place for the Korean stock market to maintain its favorable trend," stating, "We will further accelerate the amendment of the Commercial Act."
To this end, the Democratic Party aims to swiftly promote the second amendment to the Commercial Act, which includes mandatory cumulative voting and expanding the separate election of audit committee members as its core content.
Previously, on the 3rd, the amendment to the Commercial Act that was passed by the National Assembly through a bipartisan agreement expands the fiduciary duty of directors to 'companies and shareholders' and includes provisions to specify this. However, the mandatory cumulative voting and the separate election of audit committee members proposed by the Democratic Party as measures for improving corporate governance were postponed due to differences between the ruling and opposition parties. The Democratic Party has signaled intentions to push for this again in the July extraordinary National Assembly, with Chairperson Jin reiterating the urgency of legislative action.
Chairperson Jin explained, "Cumulative voting is already stipulated in the Commercial Act, but it is allowed not to be implemented according to the company's articles of incorporation," adding that, "The aim is to eliminate the monopoly of major shareholders on the board of directors."
He also added, "The audit committee is an organization that monitors the management, but if it is dominated by major shareholders, can it monitor effectively? Therefore, the core of this amendment is to expand the separate election of audit committee members from one to two."
He emphasized, "General shareholders and minority shareholders' interests must not be sacrificed for the benefits of major shareholders any longer. To correct the tilted playing field, two systems are essential."