Biz circles refute corp. governance reform bill

The business circles refuted reform bills proposed by the government for corporate governance, denouncing the package as a far-fetched desk theory. Consequently, economic organizations including the Federation of the Korean Industries (FKI) have submitted their version of reform bills to the government and resolved to aggressively state their cases for refuting reform bills proposed by the government through public hearings.

An official from the FKI strongly criticized the government¡¯s tendency to fetter everything with laws and regulations and asserted that the reform on corporate governance should start by promoting favorable corporate conditions with improved management transparency and efficiency through enhanced M&A markets, reinforced underwriting abilities and external corporate audits. This criticism is based on the logic that trying to enforce every detail with legal regulations would simply increase the cost of enforcing the law and the cost borne by companies, without a guarantee that neither corporate management transparency, impartiality nor efficiency would improve.

The private business sector refuted the government proposal of mandating an approval from the shareholder¡¯s meeting for inter-affiliate transactions that exceed 5% or more of the sales and mandating the public announcement of shareholder¡¯s meeting 30 days in advance, as opposed to the current 15 days. The business circles asserted that such practices would delay decision-making processes and lower corporate competitiveness.

Moreover, the private businesses pointed out that the cumulative voting where minor shareholders get together to vote on an issue goes against international standards and impede entrepreneur¡¯s management drive.

As for the government proposal of broadening the requirement of having 50% of directors be outside directors from companies with assets over 2 trillion on all the listed companies, the business circles expressed a concern that such practices would lead to entrusting corporate management to non-specialists and would impede corporate competitiveness in the global market.