South Korea Expands Fiduciary Duty to Boost Market Valuations
South Korea's parliament has revised the Commercial Act to enhance board members' fiduciary duties, thereby protecting minority shareholders. This legislative change, supported by President Lee Jae Myung, aims to eliminate the 'Korea Discount', which undermines South Korean companies' market valuations compared to global peers.
- Country:
- South Korea
On Thursday, South Korea's parliament passed a significant amendment to the Commercial Act, expanding the fiduciary responsibilities of board members to safeguard minority shareholders' interests. This legislative move seeks to enhance the market valuations of South Korean corporations.
President Lee Jae Myung, recently elected, has been a strong proponent of the legislation, which aims to dismantle the 'Korea Discount.' The term describes how South Korean companies often trade at lower valuations compared to their international counterparts, partly due to the influence of family-owned conglomerates that prioritize their interests.
While a similar bill was previously blocked by the conservative government of Lee's predecessor, the current version has garnered bipartisan support, marking a compromise backed by the conservative main opposition party.
(With inputs from agencies.)
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