South Korea Bolsters Corporate Accountability with Revised Commercial Act
South Korea's parliament revised the Commercial Act to enhance board members' responsibilities towards minority shareholders, aiming to increase corporate valuations and counter the 'Korea discount.' President Lee Jae Myung supported the legislation, which could elevate South Korea's market status and help the KOSPI index reach new heights.
In a significant legislative move, South Korea's parliament has passed a revised Commercial Act, designed to enhance the fiduciary responsibilities of company board members. This revision aims to better protect minority shareholders and boost corporate valuations, a plan strongly backed by President Lee Jae Myung.
The 'Korea discount,' which describes the lower market valuations of South Korean companies compared to their global counterparts, has been attributed to the dominance of family-run conglomerates. The revised act, a compromise between political parties, seeks to address these issues and was strongly advocated for by President Lee to fulfill his election promises.
Following the passage of the legislation, the benchmark KOSPI index saw a rise, indicating market optimism about future upgrades to South Korea's market status by MSCI. However, some business groups expressed concerns over the potential legal vulnerabilities the act could pose to directors.
(With inputs from agencies.)
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