Eo Bok-hyeon, the head of the Financial Supervisory Service, emphasized on the 10th that shareholder protection and improvements in corporate governance must be achieved for the advancement of capital markets.
On the same day, Eo attended a ‘CEO meeting of asset management companies’ held at the Korea Financial Investment Association in Yeouido, Seoul, and noted, "Political tactics and interests should be set aside, and legislation that can operate concretely and practically must be enacted as soon as possible."
It appears that Eo made these remarks with the government’s veto power over the amendment to the Commercial Act in mind. The amendment aims to expand the duty of care of directors from 'the company' to 'the company and shareholders.' It passed the National Assembly’s plenary session on the 13th of last month under the lead of the opposition, but the ruling party and government exercised veto power, arguing it could dampen corporate activities.
However, Eo has consistently expressed the position that the government must accept the amendment to the Commercial Act, stating that changes are necessary to advance capital markets and restore market trust.
Eo said, "Although visible results have been achieved in the advancement of capital markets, protecting shareholder interests and improving corporate governance remain unfinished," and added, "While everyone agrees on the necessity and direction, it is unfortunate that the lack of consensus on methodology has prevented tangible outcomes."
He urged the CEOs of asset management companies attending the meeting to focus all their capabilities to overcome the chronic undervaluation of the domestic capital market, declining corporate performance, and the global tariff war.
Eo remarked, "Asset management companies are obliged to have a duty of loyalty to investors under the Capital Market Act," and added, "However, cases that undermine investor primacy, such as formal voting rights, pursuit of personal interests by major shareholders and executives, and decision-making biased towards stakeholders, are frequently occurring."
He further added, "The FSS will clearly disclose necessary information so that the market can identify sincere fiduciaries by specifying exemplary practices and inadequate cases of voting rights exercise."
He also requested special attention regarding pricing errors in funds managed by some asset management companies. Eo stated, "Recently, a fierce competition to reduce fees for expansion has been escalating, centering around some large firms, while fundamental pricing errors in fund management are repeating," and added, "We will inspect the overall management and operation system of firms focused solely on noise marketing."
The meeting was held to discuss ways to advance capital markets and ensure the sound development of the asset management industry. Eo, along with key officials from the FSS, the president of the Korea Financial Investment Association, and CEOs from 23 asset management companies, participated in the meeting.
The CEOs of asset management companies requested the FSS to establish measures for providing incentives for exemplary institutions and allowing the listing of foreign currency denominated ETFs to advance capital market and asset management industry development.