Lee Bok-hyun, the governor of the Financial Supervisory Service, said on Wednesday that he had tendered his resignation in protest against the acting president’s veto of a bill led by the opposition, which aimed to hold company directors accountable for harming general shareholders through their boardroom decisions. However, the chair of the Financial Services Commission rejected his resignation offer.
Lee, whose term ends in June, has been a strong advocate for amending the Commercial Act to broaden the fiduciary duties of directors to encompass both the company and its shareholders. He had previously promised to stake his position on the fate of this bill.
Following the National Assembly's approval of the amendment on March 13, the head of the FSS repeatedly emphasized the need for its implementation. Meanwhile, the government appears to favor revising the Capital Markets Act instead — a measure seen as a watered-down alternative to the main opposition party’s proposal.
“I recently offered my resignation to the chair of the Financial Services Commission, but the Deputy Prime Minister and the Governor of the Bank of Korea persuaded me to reconsider,” Lee explained during a Wednesday morning radio interview.
He expressed concern over the vetoed Commercial Act revision, saying that sending the same version of the bill back to parliament for a revote would undermine efforts to enhance shareholder value.
“Had President Yoon Suk Yeol been in office, I believe he would not have exercised his veto as protecting shareholder value and advancing the capital market are policies promoted by him," Lee said.
The Constitutional Court will deliver its ruling on the president’s impeachment over his short-lived martial law attempt on Friday.
The main opposition Democratic Party of Korea anticipates that revising the Commercial Act to better align corporate and shareholder interests will help address the so-called "Korea discount," the persistent undervaluation of the country's equity market.
Lawmakers of the ruling People Power Party asserted that the amendment would delay corporate decision-making and exacerbate legal risks.
In response, the government has proposed amending the Capital Markets Act to include measures to safeguard shareholders during mergers, spin-offs and other significant business transactions.
If amended, the Commercial Act would affect some 1.02 million companies, including unlisted firms, while the revised Capital Market Act would cover some 2,400 listed companies.
On Tuesday, acting President Han Duck-soo exercised his veto power over the amendment to the Commercial Act, returning it to the National Assembly for further consideration.
While agreeing with the general intent of the bill, the acting president emphasized its potentially significant impact on the business environment and the competitiveness of both large and small companies.
“I concluded that there is a need to explore alternative solutions to minimize side effects through more thorough discussions and serious reflection, and I intend to call for the National Assembly’s reconsideration,” he said.
hnpark@heraldcorp.com
