Financial Holding Company Chair’s Third Consecutive Reappointment Would Require 75% Shareholder Approval; Governance Reform Plan Moves to Full-Scale Government-Ruling Party Talks

[Financial News] Financial authorities have drawn up a corporate governance reform plan centered on gradually tightening the approval requirements of the executive candidate recommendation committee and shareholders’ meetings each time a financial holding company chair seeks reappointment.
On the 3rd, according to financial and political circles, the Financial Services Commission (FSC) briefed Democratic Party of Korea (DPK) lawmakers on the National Policy Committee of the National Assembly of the Republic of Korea on the governance reform plan on the 2nd.
Under the plan drawn up by the FSC, the initial appointment of a chair requires the approval of at least two-thirds of the nomination committee members. At the subsequent shareholders’ meeting, the resolution must receive approval from a majority of the voting rights held by shareholders present and votes in favor representing at least one-quarter of all issued shares.
When a financial holding company chair seeks reappointment, the requirements are tightened: at least three-quarters of the nomination committee members must approve, and at the shareholders’ meeting, approval must represent at least two-thirds of the voting rights held by shareholders present and at least one-third of all issued shares.
For a third consecutive reappointment, the nomination committee requirement remains the same, while approval at the shareholders’ meeting must represent at least three-quarters of the voting rights held by shareholders present and at least half of all issued shares.
Initially, the FSC also considered banning a third consecutive term by law, but settled on gradually tightening the approval requirements.
“There are concerns not only among the opposition but also within the ruling party,” an FSC official said. “We took comprehensive account of governance reform and the purpose of the law, among other things.”
In addition, the chair of the nomination committee that recommended a candidate for financial holding company chair will personally explain at the shareholders’ meeting why the candidate was recommended. The plan is also understood to include applying a responsibility map to the nomination committee chair to ensure transparency and fairness in the executive nomination process.
The governance reform plan is expected to be finalized soon after consultations between the government and ruling party. It is then expected to take effect once the relevant laws are amended following agreement between the ruling and opposition parties.

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