Democratic Party Promotes 'Korea Boost-Up' Project... Expands Fiduciary Duty of Directors

Promotion of Concentrated Voting System for Large Corporations and Expansion of Minority Shareholder Rights

The Democratic Party of Korea proposed the 'Korea Boost-Up Project' as a measure to enhance corporate value (value-up). The project includes plans such as expanding directors' fiduciary duties and increasing the separate election of auditors and directors.

Democratic Party Policy Committee Chair Jin Seong-jun and Representative Kim Nam-geun are announcing plans to promote the 'Korea Boost-Up' project, aimed at resolving the 'Korea Discount' in the stock market and ensuring that Korean companies are properly valued.
[Image source=Yonhap News]

On the 30th, Jin Seong-jun, the policy chief of the Democratic Party, stated at a press conference at the National Assembly in Yeouido, Seoul, "The Democratic Party will take the lead in raising corporate value and upgrading the capital market," adding, "We will promote five major boost-up projects to democratically improve corporate governance and secure long-term upward momentum in the capital market."

The Democratic Party plans to pursue through the project ▲expansion of directors' fiduciary duty targets ▲mandatory appointment of independent directors ▲gradual expansion of separate elections for auditors and directors ▲cumulative voting system for large corporations ▲and expansion of minority shareholders' rights such as electronic voting for listed companies. Democratic Party lawmaker Kim Nam-geun said, "In Korea, even if you invest in stocks, retail investors find it difficult to make profits," and added, "While stock prices in the U.S. and Japan have risen since COVID-19, Korea's have not, so we intend to push policies such as reforms to make governance transparent."

The reason for promoting the project is that enhancing corporate value is difficult with only the Yoon Seok-yeol administration's value-up project. The government announced a tax law amendment for value-up on the 25th. The core content is to reduce corporate tax for companies that increase shareholder returns through dividends and share buybacks, and to lower the tax rate by up to 20 percentage points by separately taxing dividend income. Jin, the policy chief, said, "The top priority to overcome the Korea discount is to increase transparency within companies and move away from the backward governance structure dominated by a single controlling shareholder," adding, "However, the Yoon administration has presented preferential tax cuts for major shareholders as a value-up project while ignoring this reality."

However, regarding governance improvement, the possibility of future cooperation with the government and ruling party was left open. Jin said, "The government has never formally mentioned the expansion of directors' fiduciary duties, which is a key issue in value-up," but added, "If the Democratic Party takes the initiative, it could cooperate with the government and ruling party."

This content was produced with the assistance of AI translation services.