Lee Bok-hyun "Commercial Act Quickly Passed in Legislation and Judiciary Committee... Difficult to Support"

Briefing After Meeting with Securities Firm CEOs
"Limited Impact on Financial Sector from Homeplus Workout"

Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), recently expressed his difficulty in supporting the amendment to the Commercial Act that was passed by the Legislation and Judiciary Committee.

Yonhap News

On the 5th, during a back briefing held after a meeting with CEOs of securities firms, Governor Lee said, "The system should be designed with attention to detail, but I have doubts whether there was sufficient discussion when the bill was 'hurriedly' passed in the Legislation and Judiciary Committee."

He added, "The devil is in the details," pointing out concerns about the ongoing amendment to the Commercial Act, including excessive criminalization, procedural regulations under the Capital Markets Act, and protection of outside directors.

He stated, "Concepts such as 'major shareholders' in the regulations do not clearly match those in existing laws, inevitably leading to interpretative ambiguity," and emphasized, "Besides concerns about excessive criminalization, the amendment should be made simultaneously with the Capital Markets Act, and appropriate director protection measures must be established."

Governor Lee explained, "While securities firm CEOs agreed on the need for legislation to advance governance, they also expressed concerns that the current amendment could increase management uncertainty and hinder directors' rational decision-making."

Regarding the financial sector's risk exposure related to the commencement of Homeplus's corporate rehabilitation procedure (court receivership), he described it as "a manageable level." Homeplus applied to the Seoul Bankruptcy Court for the commencement of corporate rehabilitation procedures the day before, proactively responding to potential funding issues following a credit rating downgrade.

He emphasized, "It does not seem likely that the financial sector will face large-scale losses," adding, "Although classification may differ from normal claims, individual company analyses show that the level is not significant."

The FSS announced plans to focus its financial investment inspection capabilities this year on the captive sales practices in the bond market. He said, "In the first half of this year, we aim to improve unfair practices within the bond market," and added, "You can consider this as an effort to normalize the previously chaotic bond market practices."

Regarding the recent intensifying reduction of fees for exchange-traded funds (ETFs), he plans to also examine potential conflicts of interest. "There are movements that seem to shift costs by lowering fees for index ETFs such as the S&P 500 or Nasdaq while raising fees for other ETFs," he explained, "Given the possibility of conflicts of interest, we plan to conduct inspections and reviews and consider institutional improvements."

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