South Korea Passes Law To Strengthen Shareholder Rights

South Korea’s National Assembly has passed a major amendment to the Commercial Act designed to enhance shareholder rights and improve corporate transparency.

The new law makes it compulsory for large listed companies, particularly those with assets of more than 2 trillion won (around \$1.4 billion), to adopt cumulative voting in board elections. It also requires separate votes for audit committee appointments, a move aimed at curbing the dominance of controlling shareholders and giving minority investors a stronger voice in corporate decision-making.

The reform is part of a wider effort by President Lee Jae Myung’s administration to tackle what is widely known as the “Korea Discount,” a term describing how South Korean companies have historically been undervalued due to opaque governance practices and concentrated ownership structures.

The changes build upon earlier amendments passed in July, which broadened the fiduciary responsibilities of directors to ensure greater protection for minority shareholders. That earlier bill was vetoed under the previous acting president but has now been reinforced under the current leadership.

Investor advocates have welcomed the measures, saying they could boost confidence in South Korea’s markets and attract more foreign investment. However, business associations and industry groups have voiced opposition, warning that the new rules could increase the risk of management disputes and trigger legal battles, which in turn may destabilize companies and hinder efficient decision-making.