Lee Jae-myung, the Democratic Party of Korea presidential candidate who promised a "KOSPI 5000 Era," made pledges related to the capital market, including the establishment of a fair market order, improvement of corporate governance, eradication of the controlling shareholder's appropriation of benefits, and revitalization of the stock market. In particular, the contents included a commitment to amend relevant regulations to ensure that the introduction of a cumulative voting system cannot be excluded by the articles of incorporation, and to enhance the effectiveness of the public offering redemption rights system.
On this day, the Democratic Party of Korea released the policy pledge book for the 21st presidential election. In the 375-page pledge book, the party presented three major visions of recovery, growth, and happiness, along with 15 policy tasks. The pledges related to the stock market and capital markets were included in the growth sector among these three visions.
Candidate Lee made pledges through the pledge book, including ▲ Establishing a fair market order by eradicating unfair practices and price manipulation ▲ Protecting the rights and interests of minority shareholders through improvements in corporate governance ▲ Eradicating the appropriation of benefits by controlling shareholders who exploit capital and profit transactions ▲ Revitalizing the stock market by improving supply and demand conditions and enhancing liquidity.
First, he expressed a commitment to establishing a fair market order. He proposed implementing a one-strike-out system for unfair practices in capital markets and mandated that if executives and major shareholders of listed companies earn short-term trading profits, the corporation is obligated to reclaim those profits.
He also stated that he would review measures to strengthen the eligibility review for private equity funds (PEF), investment partnerships, and limited partners (LP). This is to prevent cases of investment partnerships being abused for purposes such as indirect acquisitions or nominal ownership. In addition, the plan includes the introduction of a Korean-style fairness fund to enhance compensation for investors.
He also revealed his commitment to improving corporate governance. In particular, he plans to establish principles to ensure that the duty of loyalty of directors to shareholders is clearly defined so that the interests of all shareholders can be considered. This reiterates a previous commitment to amend the corporate law, which had stalled.
The contents also included a commitment to amend relevant regulations to ensure that the introduction of a cumulative voting system cannot be excluded by the articles of incorporation. Currently, the cumulative voting system can be excluded according to the company’s articles of incorporation, and the intention is to prevent this.
Additionally, for companies of a certain scale or larger, it will be mandatory to appoint independent directors in a certain proportion, who can independently voice oversight, and gradually expand the separate election of audit committee members for large listed companies, mandate electronic voting for large listed companies, and encourage the introduction of advisory shareholder proposals.
He declared that he would also prevent the appropriation of benefits by controlling shareholders. Specifically, he plans to apply a fair price that considers stock prices, asset values, and revenue values when determining the acquisition or merger prices for publicly listed companies.
He promised to institutionalize the allocation of new shares to both the parent company and minority shareholders when a subsidiary is listed after a physical division.
He also plans to implement mandatory public purchases to share management control premiums and guarantee opportunities for minority shareholders to redeem their shares during company acquisitions. When merging publicly listed companies and their affiliates, there will be a system that allows minority shareholders to request an examiner through the courts.
Moreover, he plans to review the institutionalization of the principle of extinguishing treasury shares, and to strengthen monitoring and sanctions against unfair internal transactions.
He stated that to revitalize the stock market and resolve the Korea discount (the undervaluation of the Korean stock market), he plans to reorganize the stock market according to the characteristics of listed companies and strengthen shareholder returns.
He pledged to resolve the issues related to public offering stocks that plunge from the first day of listing. To achieve this, he noted a shift from quantitative policies focusing on the number of listed companies to qualitative policies aimed at improving market conditions. He also mentioned reviewing the redemption rights system that is currently being implemented in a limited manner.
Moreover, he plans to revise the system to expand the inflow of foreign investors and promote inclusion in the MSCI developed market index. He also mentioned improving returns through the gradual scale-up of retirement pensions, such as expanding the retirement pension fund for small and medium-sized enterprises, and facilitating the inflow of new funds through upgrading KOSDAQ venture funds.