Presidential candidates, including Lee Jae-myung of the Democratic Party of Korea and Kim Moon-soo of the People Power Party, have all stated their willingness to stimulate the stock market as their 10 key pledges. However, regarding the recent key issue of introducing a duty of shareholder loyalty through amending the commercial law, while Lee expressed his intent to reintroduce the initiative, Kim showed support for the government's revised proposal.
According to the National Election Commission on the 14th, Lee presented his plan to boost the stock market through the third of his 10 key pledges, "I will enhance the vitality of households and small businesses and realize a fair economy."
In his plan aimed at improving stock market conditions and enhancing liquidity, Lee promised to restructure the stock market according to the characteristics of listed companies and strengthen shareholder returns. He also mentioned his intent to actively pursue institutional reforms aimed at expanding foreign investment inflows and inclusion in the Morgan Stanley Capital International (MSCI) developed market index.
In particular, he decided to protect the rights of common shareholders through improvements in corporate governance, including the introduction of the duty of shareholder loyalty under the commercial law. He emphasized that he would eradicate the exploitation of controlling shareholders using capital and profit-and-loss transactions and eliminate unfair market practices such as stock manipulation and damage-and-run schemes to create a fair market order.
In connection with this, Lee noted in the "stock market revitalization policy announcement" he posted on Facebook last month, "I will eliminate the Korea discount through recovery and growth and usher in an era of 5,000 in the stock index," and added, "I will reintroduce amendments to the commercial law to protect shareholder interests. I will activate cumulative voting so that directors representing minority shareholders can be appointed."
To establish a fair market order, he asserted that he would introduce a "one strike out system" so that if anyone engages in stock manipulation even once, they would never be able to step into the stock market again. He also decided to reinforce pre-monitoring to strictly punish unfair practices using undisclosed information and strengthen measures to recover short-term capital gains.
In addition, he pledged to ▲expand the separate election of audit committee members and strengthen management oversight functions ▲fairly evaluate corporate value during mergers ▲prioritize issuing new shares to general shareholders during "split listings" ▲principally retire listed companies' treasury shares.
Kim Moon-soo presented the stock market-related blueprint through his fifth key pledge, "Enriching the assets of the middle class, a country of opportunities." He stated that he would begin tax reforms, including providing tax benefits for long-term stockholders or funds. He also decided to separately tax dividend income and to expand the payment limit and non-taxable limit for Individual Savings Accounts (ISAs) to 40 million won and 10 million won per year, respectively.
Last month, Kim also explained specific measures through his pledge on "Modernizing K Capital Markets to Escape Long-Term Stagnation." He remarked, "The president's overseas visits are the best timing to promote K Capital Markets," stating that the president would directly engage in investor relations activities targeting foreign investors.
Kim pledged to establish a financial and economic advisory committee, including the Deputy Prime Minister for Economy, the Governor of the Bank of Korea, the Chairman of the Financial Services Commission, the Chairman of the Financial Supervisory Service, and private experts, and to activate market briefings to resolve policy uncertainties. He proposed that dividends would be non-taxable up to 50 million won, while exceeding income would be taxed at a separate rate of 20%. He also mentioned the intent to strengthen punishments for economic offenders, including stock manipulation, with penalties extending up to life imprisonment and to introduce a punitive damages system.
In regard to the proposed amendment to the commercial law that the government exercised its right to request reconsideration after National Assembly approval, Kim supported the current government's position of promoting amendments to the Capital Markets Act as an alternative. Instead of amending the commercial law to cover unlisted small and medium-sized enterprises, the plan is to significantly strengthen obligations to protect shareholders for listed companies and enhance the expertise of outside directors to improve corporate governance.