Ruling Party Targets "Stock Price Suppression Prevention" and Exchange Reform Next...Legislative Drive

Improvements to the Stewardship Code and Resolution of Dual Listing Issues to Be Pursued Within This Year

As the ruling Democratic Party of Korea is pushing ahead with the third amendment to the Commercial Act, centered on making the retirement of treasury shares mandatory, it is expected to leverage the achievement of the "KOSPI 5000" milestone to drive the legislation through within this year.

According to the National Assembly’s bill information system on the 16th, in addition to the third amendment to the Commercial Act, capital market-related bills such as the Stock Price Suppression Prevention Act, measures to resolve the problem of dual listings, reform of the stock exchanges, and improvements to the stewardship code have been introduced at the initiative of Democratic Party lawmakers.

On the 30th, KOSPI surpassed the 5,300 intraday level for the first time ever, and related stock prices were displayed at the Korea Exchange in Yeouido, Seoul. According to the Korea Exchange, at 10:25 a.m. on the 30th, KOSPI surged to 5,316.10, up 1.82% (94.85 points) from the previous trading day (5,221.25). January 30, 2026 Reporter Kim Hyunmin

The Democratic Party’s Special Committee on K-Capital Market (formerly the KOSPI 5000 Special Committee), which was launched shortly after the inauguration of the Lee Jaemyung administration, plans to broaden its goals after achieving the KOSPI 5000 target and move on to improving the overall structure of the capital market, including the KOSDAQ market.

Previously, in July last year, the Democratic Party passed the first amendment to the Commercial Act, which expanded directors’ fiduciary duty to shareholders from the company alone to "the company and its shareholders," and made the introduction of electronic general shareholders’ meetings mandatory. About a month later, it passed the second amendment to the Commercial Act, which included the mandatory introduction of the cumulative voting system for large listed companies with assets of 2 trillion won or more.

The third amendment to the Commercial Act, which would make the retirement of treasury shares mandatory, is currently pending in the Legislation and Judiciary Committee of the National Assembly. The Democratic Party argues that companies must retire newly acquired treasury shares within one year. The grace period for disposing of treasury shares that companies already hold is 18 months. As an exception, if a company wishes to continue holding its treasury shares, or to change the method and timing of their disposal, it must obtain approval at the general shareholders’ meeting. Although there are differences of opinion over which cases should be treated as exceptions, the Democratic Party’s leadership in the National Assembly intends to move as quickly as possible on the Commercial Act amendments.

Once the three stages of Commercial Act amendments are completed in broad outline, the party will move on to concrete capital market reforms.

First, it is expected to push forward, as a follow-up measure, the "Stock Price Suppression Prevention Act" (an amendment to the Inheritance and Gift Tax Act). This bill, proposed by Democratic Party lawmaker Lee Soyoung, is centered on setting the tax base for shareholders of listed companies with a price-to-book ratio (PBR) of less than 0.8 when they inherit or gift their shares according to the valuation method used for unlisted companies (fair value evaluation). As this bill is backed by President Lee Jaemyung and the presidential office, it is expected to move ahead at a rapid pace.

Reform of the KOSDAQ market will also get underway. An amendment to the Capital Markets Act has been introduced to separate KOSDAQ as an independent corporation and develop it into a platform for nurturing innovative companies. Democratic Party lawmaker Kim Taenyeon has sponsored a bill that would convert the Korea Exchange into a holding company and allow each market, such as KOSPI and KOSDAQ, to be separated and operated as subsidiaries.

The party also plans to push for legal amendments to strengthen the implementation of the stewardship code in the course of managing the National Pension Service fund. The idea is to include compliance with the stewardship code as one of the evaluation criteria when selecting private asset management companies that are entrusted with funds from the National Pension Service. The stewardship code, introduced in 2016, is a set of principles for institutional investors that manage assets to fulfill their fiduciary responsibilities, and its adoption has so far been left to private-sector discretion.

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