Candidate registration for the 21st presidential election, set for June 3, 2025, concluded on May 11. According to the National Election Commission, seven individuals have registered as presidential candidates. Lee Joon-seok of the Reform Party and Lee Jae-myung of the Democratic Party of Korea were officially registered on May 10, and Kim Moon-soo of the People’s Power Party completed registration on May 11.
The term of the president-elect will begin on June 4, 2025, the day following the election. A new government will also be inaugurated on the same date.
Candidates from the Democratic Party, the People’s Power Party, and the Reform Party, all of which are parties represented in the National Assembly, have announced their top ten pledges for the election. The pledges from the People’s Power Party and the Reform Party do not directly address corporate governance and corporate law matters, but the Democratic Party’s top ten pledges include, as pledge number three, a focus on “promoting the vitality of households and small business owners and realizing a fair economy,” which includes significant elements related to corporate governance and corporate law, areas that have garnered significant market and business attention. Specifically, the Democratic Party has committed to advancing legislation and amendments pertaining to the above pledge beginning in June 2025. The key aspects of this pledge include:
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Improving stock market supply and demand conditions and expanding liquidity
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Restructuring the stock market to reflect the characteristics of listed companies and enhancing shareholder returns |
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Reforming systems to encourage participation by foreign investors and seeking inclusion in the MSCI Developed Countries Index |
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Protecting the rights and interests of general shareholders by enhancing corporate governance, such as introducing fiduciary duties for shareholders under the Korean Commercial Code (the “KCC”)
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Eliminating controlling shareholders’ exploitation of private interests through misuse of capital and profit-and-loss transactions
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Establishing fair market order by eradicating fraudulent practices such as “eat and run” tactics and market manipulation
On April 21, Lee Jae-myung of the Democratic Party met with Seo Yoo-seok, chairman of the Korea Financial Investment Association, and the heads of research centers from 17 securities firms and discussed strategies for revitalizing the domestic stock market. During the meeting, he announced plans to reintroduce a formerly proposed amendment to the KCC, which would include the following enhancements:
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Expand the fiduciary duty of company directors to encompass responsibilities not only to the company but also to its shareholders |
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Mandate the holding of general meetings of shareholders by way of virtual meetings |
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Implement obligations for cumulative voting systems in large-scale listed companies |
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Strengthen requirements for separate election of audit committee members in large-scale listed companies |
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Improve the system to grant priority allocation of new shares to the parent company’s minority shareholders in case of split-off listing |
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Institutionalize a rule that, in principle, treasury shares held by listed companies should be cancelled to enhance shareholder value |
Although it was not explicitly part of his pledge, media reports indicate that Kim Moon-soo, a candidate from the People’s Power Party, supported the current government’s stance to revise the Financial Investment Services and Capital Markets Act (the “FSCMA”) as an alternative to amending the KCC. Instead of amending the KCC, which also impacts unlisted small and medium-sized enterprises, Kim Moon-soo proposed improving corporate governance by significantly strengthening shareholder protection obligations for listed companies only and enhancing the expertise of outside directors.
As mentioned in our previous newsletters (linked below), companies may want to review the following:
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The proposed amendments to the KCC, which include suggestions from the Democratic Party to introduce an obligation for directors to protect the interests of all shareholders (Link) |
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The current government’s alternative proposal, which suggests amendments to specific provisions of the FSCMA (Link) |
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The actual legislative progress of the proposed amendments to the KCC, which also includes the obligation to protect the interests of all shareholders (Link) |
With the approaching presidential election and the inauguration of a new administration, these pledges aimed at enhancing corporate governance and systems related to corporate law could become law. If enacted, these new laws and regulations may significantly impact companies’ business operations, strategic planning, financial capabilities, and investor relations decisions.
