South Korea parliament passes amended bill to target low equity valuations

South Korea's parliament connected Monday approved a measure that intends to summation the accountability of firm boards to shareholders, arsenic the ruling party-controlled parliament pushes reforms to boost the country's equity valuations.

The revised Commercial Act bill, a follow-up to earlier revisions passed on July 3, volition unit ample companies to instrumentality much abstracted votes erstwhile introducing audit committee members to fortify oversight.

The measure besides "aims to alteration number shareholders to elite their ain representatives to the board," said Kim Jin-wook, a Citi Research expert based successful Seoul.

The changes travel arsenic President Lee Jae Myung pledged to revive authorities to curb abuses by controlling shareholders aft helium signaled improving firm governance could assistance destruct the alleged "Korea Discount", a word that refers to little valuations of Korean companies compared with overseas peers owed to their opaque governance structure.

The ruling Democratic Party holds the bulk successful the 300-seat parliament, making the transition of contentious bills easier aft Lee's predecessor, acting President Han Duck-soo, sided with conglomerates and vetoed the bill.

The commercialized enactment revision has been fiercely opposed by South Korean businesses.

"We regret that the National Assembly passed a supplementary amendment to the Commercial Act conscionable a period aft the archetypal revision, aimed astatine expanding the abstracted predetermination of audit committee members and mandating a cumulative voting system," The Federation of Korean Industries said successful a connection connected Monday.

It besides urged parliament to enactment connected ways to minimize the interaction present that "the important imaginable for accrued absorption disputes and litigation risks" is expected.