South Korea corporate reform passed to enhance shareholder voting power and improve transparency in family-run conglomerates
The South Korea corporate reform took a significant step forward on Monday as parliament passed a revision to the Commercial Act aimed at increasing accountability of major companies to their shareholders.
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This reform targets the country’s family-run conglomerates, or chaebol, such as Samsung Electronics, which have long been criticized for complex cross-shareholdings that limit shareholder influence despite their outsized control.
With 180 votes in favour, the revised law introduces a voting system that enables shareholders to concentrate all their votes on a single board candidate, significantly empowering minority shareholders in firms with assets over \$1.4 billion.
Additionally, the number of audit committee members not elected by controlling shareholders will increase from one to at least two, further enhancing oversight.
President Lee Jae Myung, who campaigned on corporate reform to protect minority investors, hailed the bill as a milestone in promoting transparency and economic justice.
However, business groups like the Federation of Korean Industries have expressed concerns about potential management conflicts and legal risks, urging for balanced legislation.
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The reform has already fueled optimism in the markets, with South Korea’s Kospi index rising 15.8 percent since President Lee’s inauguration in June.
