Korea's Reform Drive Gets a Boost as Lawmakers Vote for Changes
The revisions to the so-called commercial code include making board members legally accountable to all shareholders, instead of catering largely only to those with significant stakes — such as the founding families of the nation's many conglomerates. Another key change is to limit the voting rights of the largest shareholders and related parties to 3% when appointing the members of an audit committee.
South Korean authorities have been seeking to replicate the success seen in Japan, where a push for corporate reforms helped lift stock valuations and spur a world-beating equity rally. Korea unveiled a so-called 'Corporate Value-up Program' in early 2024 with a view to incentivize firms to prioritize shareholder returns.
The resolve though has intensified in recent months as newly elected President Lee Jae-myung made lifting governance standards and improving stock-market returns one of his top priorities.
Expectations that South Korea is embracing a more shareholder-friendly culture have been a major driver behind this year's surge in the nation's stocks, which has propelled the market's value to over $2 trillion.
The benchmark Kospi Index has surged almost 30% in 2025 to be one of the world's best-performing gauges. It largely held its 1.2% gain on Thursday following the outcome of the vote.
'This amendment to the Commercial Act sends a positive signal, as it demonstrates the strong commitment of the government and the National Assembly to corporate governance reform,' said Seokkeun Ha, chief investment officer at Eugene Asset Management in Seoul. 'In the short term, it could provide supportive momentum for the Kospi, backed by expectations of foreign capital inflows.
With assistance from Shinhye Kang.
This article was generated from an automated news agency feed without modifications to text.
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