10 key issues Lee administration is asked to address for completion of CG reform;
KOSPI at crossroad: 7000 vs. 3500
- KOSPI not be undervalued at 12x earnings; it may signal peak earnings
- There is risk of a sharp drop to 3500 if semi cycle falters and CG reforms regress
- Strong "investor protection" policies must be implemented to support valuation
- Inflating KOSDAQ will have significant side effects; only solution is to rapidly exit marginal companies
- There is need to restart value-up program with enforcement, along with director training program
- Improvements in AGM procedures and disclosure of decision-making process/results of the National Pension Service's trustee committee are necessary
- An exit mechanism for severely undervalued listed companies through M&A (the "Bear Hug") should be introduced
- A specialized corporate law court similar to the Delaware should be established
KOSPI is in the process of resolving its discount. We are now in the fourth inning, so there is a long way to go. Korea's 10-year total shareholder return (TSR) has surpassed Japan's, with a rate of 13% pa compared to Japan's 11%. Just last April, the 10-year TSR for Korea was only 5%, which was half of the required rate of return for equity investors, highlighting a significant change. Taiwan's valuations are now approaching those of the U.S., with a TSR of 21%, surpassing that of the U.S. In comparing Korea and Japan, our dividend yield (1.1%) is half that of Japan's (2.1%). To foster long-term investment in the Korean capital market, local listed companies must significantly increase dividends.
The Korean market has doubled to 5000 from 2500 May 2025, yet its P/E multiple remains at 12x. This is incomparable to Taiwan's 20x and approximately two-thirds of Japan's 17x. So, is the KOSPI extremely undervalued? The likelihood is low, in our view. Korea has the world's most cyclical industrial structure, and the earnings of Korean companies are known for their boom and bust cycles. The high volatility of earnings, together with poor CG, is a factor leading to valuation discounts.
In the highly cyclical semiconductor industry, the closer earnings approach their peak, the lower the P/E multiple tends to be. The estimated P/E for Samsung Electronics in 2026 is 8x, and for Hynix, it is 6x, indicating that their stock prices are not far from their peak earnings. If the semiconductor cycle falters and CG reforms regress, the KOSPI could drop to 3500, in our view. Conversely, if CG reforms are continuously pursued, indices of 6000 or 7000 are not impossible. If investor protection is assured, international funds will continue to flow in. The National Assembly and government must pursue strategies to raise the equity valuation through CG reforms.
Inflating the KOSDAQ is undesirable and will have significant side effects. The KOSPI has many undervalued stocks relative to fundamentals, and resolving valuation discounts through CG improvements is the correct approach. However, the KOSDAQ's fundamentals are questionable, and its valuations are already high. The path to revitalizing the KOSDAQ is to boldly expel weak companies, even if it becomes a political burden for President Lee.
In April of last year, the Forum published a commentary titled "Seven capital market initiatives for incoming government.” A month later, in May, the Forum released another Opinion letter, "Commercial Act revision may be catalyst for KOSPI 5000.” In January 2026, the Forum presented “10 key issues the government is asked to address for completion of corporate governance reform.”
1. Strengthen exceptional requirements of stock buyback law and legislate it immediately; KRX should improve market cap calculation
2. Prohibit listing of subsidiaries as a general principle
3. Restart value-up initiatives with enforcement
4. Implement education program for directors
5. Establish Taiwanese-style investor protection center
6. Improve procedures for AGM
7. Publicly disclose decision-making process and results of the National Pension Service's Special Committee on Responsible Investment and Governance in charge of key voting decisions
8. Introduce an exit mechanism for severely undervalued listed companies through M&A (the "Bear Hug")
9. Prohibit the abuse of comprehensive exchanges of shares
10. Establish specialized corporate law court similar to the Delaware
1. Strengthen exceptional requirements of share buyback law and legislate it immediately; KRX should improve method of calculating market cap
The soon to be formalized law regarding mandatory stock buybacks is expected to have its exceptional requirements reflecting strong lobbying by chaebol and its lobbying agencies. There are many issues with the exception clause that allows for achieving the company's "management purpose" under circumstances such as the introduction of new technologies or improvements in financial structure.
It has been 6 months since the Commercial Act was revised last July, but companies are already attempting to undermine the effects of the legislation through issuing exchange bonds for stock buybacks and cross equity investments. The exceptions for "management purpose" regarding stock buyback holdings and disposals align with the same requirements as third-party placement of treasury shares increases; however, to protect shareholders interests, it would be advisable to pass a law that strengthens requirements for stock buyback holdings and disposals, as well as third-party allocations, in accordance with the "proper purpose" rule of the UK Companies Act Section 171(b).
There are also issues with the exception clause for allocating treasury shares to funds and charities controlled by the company. When a company like KT&G contributes its treasury shares to employee stock ownership plans, welfare foundations, scholarship foundations, and employee welfare funds etc, it creates a structural conflict of interest. The solution is to ensure the complete independence of the board of directors of the various employee welfare funds and charities. For common stock contributions, it should be conditional on the non-exercise of voting rights. If not, the intent of exercise of voting rights should be open to the public.
The Korea Exchange wrongly includes treasury shares in its market cap calculation. For example, Shinyoung Securities' market cap is 2.4 trillion won according to KRX, while the accurate market cap (after deducting treasury shares) is only 1.205 trillion won. KRX must immediately adjust its market cap calculation method to exclude treasury shares in accordance with global standards.
2. Prohibit the listing of subsidiaries as a general principle
Korea has the highest number of "dual listings," where both the parent and subsidiary companies are publicly traded, making it a significant factor in deepening the Korea discount. Last year, LG Electronics listed its Indian subsidiary in India, and LS Group attempted to go public with its subsidiary, Essex Solutions, despite strong opposition from parent company shareholders, but this week it was temporarily suspended. There is a reason why President Lee pointed out, "Do not buy stocks with an 'L' in their name."
The principle should be to maximize shareholder value and eliminate conflicts of interest by having 100%-owned subsidiaries with only the holding company listed, like U.S. Alphabet and Taiwan's TSMC. Last year, Japan's Sony publicly offered its subsidiary Sony Financial on the Tokyo Stock Exchange, distributing more than 80% of the subsidiary's shares to the parent company shareholders. Even China's Tencent distributed over 80% of its JD.com shares to parent company shareholders in 2021. If a subsidiary's listing is unavoidable, legal systems must support it to ensure that parent company shareholder interests are not infringed upon, and the board must operate independently. In this case, corporate separation is beneficial. If existing shares of a dual-listed subsidiary are proportionally distributed in kind to parent company shareholders, dividend income is subject to taxation in Korea, making a tax exemption necessary.
3. Restart value-up initiatives with enforcement
CG reform must successfully combine top-down legislative improvements and bottom-up changes in corporate behavior and attitude. The value-up initiatives led by the KRX have failed, in our opinion. The largest company, Samsung Electronics, has yet to disclose its value-up plan. Since the value-up template was well made, the Lee government should utilize it effectively and incorporate enforcement to restart the initiative. If the KRX leads again, it will fail, so it would be better for the National Assembly to take charge. The board, rather than the management, should lead, and fundamental concepts such as capital costs and capital allocation must be included.
To improve the low ROE caused by excessive holdings of non-operating assets - one of the core causes of the Korea discount - it is essential to distinguish between operating and non-operating assets (such as cash and real estate for investment purpose) and disclose specific plans for utilizing non-operating assets (investment, shareholder return, etc.) with detailed timelines.
4. Implement an education program for directors
The greatest reason for the lack of investor protection has been the authoritarianism of controlling shareholders and their chairmens’ offices, coupled with the indifference of directors who have lost their independence. Many independent directors are more concerned with pleasing the chairman, CEO, and the key executives for easy reappointment rather than being loyal to the shareholders who elected them. We should create a proper education program for directors without distinguishing between independent and inside directors. Even Chairmen of large corporate groups, such as JUNG Yong-jin of Emart and PARK Hyeon-joo of Mirae Asset, who make key decisions without sitting on the boards, should also be included in the education program. The curriculum should include essential topics for investor protection, such as shareholder rights, board independence, director duty of care and loyalty, and the Bear Hug mechanism (refer to point 8 below). The Forum hopes to play an active role in director education.
5. Establish a Taiwanese-style investor protection center
Even with legislation at the National Assembly, if it does not function in reality, CG reform will not be achieved. In Korea, there are few asset management firms not affiliated with large corporate groups or financial holding companies, making it difficult to expect institutional investors to exercise shareholder rights, and it is even more challenging for individuals to come together to exercise those rights. The litigation process and evidence collection methods are also extremely unfavorable to shareholders. We should note that Taiwan has excellently overcome these issues through the Securities and Futures Investor Protection Center (SFIPC). The Center employs about 20 lawyers who conduct various lawsuits for shareholder protection and safeguard investors. Korea urgently needs an investor protection center. If establishing it as a public institution proves difficult, it could be created with contributions from various pension funds with aligned interests.The Forum will sponsor a conference in Seoul this week to learn more about SFIPC.
6. Improve the procedures for AGM
The extremely formal operation (without much substance) of general meetings of shareholders is one of the most embarrassing issues in Korea's corporate governance. The core issue is extending the notice period for AGM from "14 days" to align with global standards. The notice period is too short, allowing domestic shareholders effectively only about 9 days to voice their opinions, while the Korea Securities Depository (KSD) requires foreign investors to exercise their voting rights 5 business days in advance, reducing the time foreign shareholders have to deliberate and be persuaded. Most advanced countries generally guarantee a minimum period of three weeks, while the Asian Corporate Governance Association (ACGA) recommends 4 weeks. A relevant amendment to the Commercial Code is urgent.
7. Publicly disclose the decision-making process and results of the National Pension Service's Special Committee on Responsible Investment and Governance in charge of key voting decisions
There is a saying among local investors that they should not invest in companies where the National Pension Service (NPS) holds shares. This is because the Special Committee on Responsible Investment and Governance makes important decisions regarding the exercise of voting rights without transparency when there are shareholder proposals. Most proposals, such as amendments to bylaws for stock buybacks or the appointment of auditors representing minority shareholders with absolute majority stakes, are opposed without any explanation, in our view. The committee should, like other national institutions, disclose detailed discussions and minutes. The proportion of governance and investment experts among the committee members is also too low. The proportion of these experts should be increased.
8. Introduce an exit mechanism for severely undervalued listed companies through M&A (the "Bear Hug").
The existence of severely undervalued listed companies with a P/B multiples of less than 0.5x, which can exist indefinitely without any competition for control, is a core factor in the Korea discount. President Lee stated during his campaign in April 2025, "Companies with a P/B of 0.1-0.2x should be quickly liquidated through hostile M&A, as it theoretically offers a ten-fold return on investment; such market inefficiency must be resolved."
In the U.S., Japan, and other advanced countries, when an investor makes a serious acquisition proposal (ie, bona fide offer) to a listed company's board, the board has an obligation to immediately form a special committee and hire advisors to review the proposal, making decisions in the best interest of all shareholders, and all processes are disclosed in detail. Therefore, listed companies that remain undervalued for a certain period are naturally exited through M&A. With the introduction of the duty of loyalty for directors in Korea, the same legal obligations now exist, making it urgent to establish "Guidelines for directors’ conduct during M&A" and to reform the disclosure system to create an exit mechanism for severely undervalued listed companies through M&A.
9. Prohibit the abuse of comprehensive exchanges of shares
The system of comprehensive exchanges of shares, which was originally designed to align the interests of shareholders in a wholly-owned subsidiary, has started to be abused as a means of expelling minority shareholders for ten years. Originally, to forcibly take shares from minority shareholders by providing them with cash, one needed to hold over 95% of the shares. However, since the introduction of cash payment methods for comprehensive exchanges of shares in 2015, a loophole has emerged that allows achieving the same effect with only 66.7% ownership. This loophole is continuously being exploited. Acquisition of Shinsegae Food by Emart (despite strong opposition of the former’s minority shareholders) is a good example. Rapid improvements are necessary. At the very least, the system of comprehensive exchanges of shares for cash compensation should not be applicable to listed companies.
10. Establish a specialized corporate law court similar to Delaware
The lack of proper civil remedies for shareholder rights in Korea is significantly influenced by the low expertise and passive rulings of courts regarding corporate law cases. Despite the very few corporate law cases, they are scattered across national courts, and relevant experiences are not properly accumulated among well-experienced judges. One key reason for the high level of trust in corporate governance in the U.S. is that the Delaware Court of Chancery, where most company headquarters are located, conducts trials and issues rulings at a level comparable to practicing attorneys due to its high knowledge and experience. To quickly realize legislative improvements, such as the delayed duty of loyalty for shareholders, we should actively discuss the establishment of specialized corporate law courts like the patent court and administrative court, which are already successfully operating.
The Forum deeply empathizes with the "Stock Price Suppression Prevention Law," which was proposed by MP Lee So-young in May 2025. It is not uncommon for companies with high controlling shareholder ratios to have stock prices with a P/B multiples of 0.3 - 0.4x. To address this issue, the proposal is that when assessing inheritance tax for companies with a P/B of less than 0.8x, the "stock price" should not be used, but rather the "valuation method for unlisted companies (asset + income fair value assessment)."
Ultimately, to fundamentally resolve CG issues, alignment among four pillars - minority shareholders, the board of directors, management, and controlling shareholders - is necessary. Once all ten key tasks are accomplished, legal and institutional improvements are made, and the attitude of controlling families toward minority shareholders fundamentally changes, a national debate on rationalizing inheritance and gift taxes may also be worth considering.
January 27th, 2026
Korean Corporate Governance Forum
Chairman, Namuh Rhee
10 key issues Lee administration is asked to address for completion of CG reform;
KOSPI at crossroad: 7000 vs. 3500
KOSPI is in the process of resolving its discount. We are now in the fourth inning, so there is a long way to go. Korea's 10-year total shareholder return (TSR) has surpassed Japan's, with a rate of 13% pa compared to Japan's 11%. Just last April, the 10-year TSR for Korea was only 5%, which was half of the required rate of return for equity investors, highlighting a significant change. Taiwan's valuations are now approaching those of the U.S., with a TSR of 21%, surpassing that of the U.S. In comparing Korea and Japan, our dividend yield (1.1%) is half that of Japan's (2.1%). To foster long-term investment in the Korean capital market, local listed companies must significantly increase dividends.
The Korean market has doubled to 5000 from 2500 May 2025, yet its P/E multiple remains at 12x. This is incomparable to Taiwan's 20x and approximately two-thirds of Japan's 17x. So, is the KOSPI extremely undervalued? The likelihood is low, in our view. Korea has the world's most cyclical industrial structure, and the earnings of Korean companies are known for their boom and bust cycles. The high volatility of earnings, together with poor CG, is a factor leading to valuation discounts.
In the highly cyclical semiconductor industry, the closer earnings approach their peak, the lower the P/E multiple tends to be. The estimated P/E for Samsung Electronics in 2026 is 8x, and for Hynix, it is 6x, indicating that their stock prices are not far from their peak earnings. If the semiconductor cycle falters and CG reforms regress, the KOSPI could drop to 3500, in our view. Conversely, if CG reforms are continuously pursued, indices of 6000 or 7000 are not impossible. If investor protection is assured, international funds will continue to flow in. The National Assembly and government must pursue strategies to raise the equity valuation through CG reforms.
Inflating the KOSDAQ is undesirable and will have significant side effects. The KOSPI has many undervalued stocks relative to fundamentals, and resolving valuation discounts through CG improvements is the correct approach. However, the KOSDAQ's fundamentals are questionable, and its valuations are already high. The path to revitalizing the KOSDAQ is to boldly expel weak companies, even if it becomes a political burden for President Lee.
In April of last year, the Forum published a commentary titled "Seven capital market initiatives for incoming government.” A month later, in May, the Forum released another Opinion letter, "Commercial Act revision may be catalyst for KOSPI 5000.” In January 2026, the Forum presented “10 key issues the government is asked to address for completion of corporate governance reform.”
1. Strengthen exceptional requirements of stock buyback law and legislate it immediately; KRX should improve market cap calculation
2. Prohibit listing of subsidiaries as a general principle
3. Restart value-up initiatives with enforcement
4. Implement education program for directors
5. Establish Taiwanese-style investor protection center
6. Improve procedures for AGM
7. Publicly disclose decision-making process and results of the National Pension Service's Special Committee on Responsible Investment and Governance in charge of key voting decisions
8. Introduce an exit mechanism for severely undervalued listed companies through M&A (the "Bear Hug")
9. Prohibit the abuse of comprehensive exchanges of shares
10. Establish specialized corporate law court similar to the Delaware
1. Strengthen exceptional requirements of share buyback law and legislate it immediately; KRX should improve method of calculating market cap
The soon to be formalized law regarding mandatory stock buybacks is expected to have its exceptional requirements reflecting strong lobbying by chaebol and its lobbying agencies. There are many issues with the exception clause that allows for achieving the company's "management purpose" under circumstances such as the introduction of new technologies or improvements in financial structure.
It has been 6 months since the Commercial Act was revised last July, but companies are already attempting to undermine the effects of the legislation through issuing exchange bonds for stock buybacks and cross equity investments. The exceptions for "management purpose" regarding stock buyback holdings and disposals align with the same requirements as third-party placement of treasury shares increases; however, to protect shareholders interests, it would be advisable to pass a law that strengthens requirements for stock buyback holdings and disposals, as well as third-party allocations, in accordance with the "proper purpose" rule of the UK Companies Act Section 171(b).
There are also issues with the exception clause for allocating treasury shares to funds and charities controlled by the company. When a company like KT&G contributes its treasury shares to employee stock ownership plans, welfare foundations, scholarship foundations, and employee welfare funds etc, it creates a structural conflict of interest. The solution is to ensure the complete independence of the board of directors of the various employee welfare funds and charities. For common stock contributions, it should be conditional on the non-exercise of voting rights. If not, the intent of exercise of voting rights should be open to the public.
The Korea Exchange wrongly includes treasury shares in its market cap calculation. For example, Shinyoung Securities' market cap is 2.4 trillion won according to KRX, while the accurate market cap (after deducting treasury shares) is only 1.205 trillion won. KRX must immediately adjust its market cap calculation method to exclude treasury shares in accordance with global standards.
2. Prohibit the listing of subsidiaries as a general principle
Korea has the highest number of "dual listings," where both the parent and subsidiary companies are publicly traded, making it a significant factor in deepening the Korea discount. Last year, LG Electronics listed its Indian subsidiary in India, and LS Group attempted to go public with its subsidiary, Essex Solutions, despite strong opposition from parent company shareholders, but this week it was temporarily suspended. There is a reason why President Lee pointed out, "Do not buy stocks with an 'L' in their name."
The principle should be to maximize shareholder value and eliminate conflicts of interest by having 100%-owned subsidiaries with only the holding company listed, like U.S. Alphabet and Taiwan's TSMC. Last year, Japan's Sony publicly offered its subsidiary Sony Financial on the Tokyo Stock Exchange, distributing more than 80% of the subsidiary's shares to the parent company shareholders. Even China's Tencent distributed over 80% of its JD.com shares to parent company shareholders in 2021. If a subsidiary's listing is unavoidable, legal systems must support it to ensure that parent company shareholder interests are not infringed upon, and the board must operate independently. In this case, corporate separation is beneficial. If existing shares of a dual-listed subsidiary are proportionally distributed in kind to parent company shareholders, dividend income is subject to taxation in Korea, making a tax exemption necessary.
3. Restart value-up initiatives with enforcement
CG reform must successfully combine top-down legislative improvements and bottom-up changes in corporate behavior and attitude. The value-up initiatives led by the KRX have failed, in our opinion. The largest company, Samsung Electronics, has yet to disclose its value-up plan. Since the value-up template was well made, the Lee government should utilize it effectively and incorporate enforcement to restart the initiative. If the KRX leads again, it will fail, so it would be better for the National Assembly to take charge. The board, rather than the management, should lead, and fundamental concepts such as capital costs and capital allocation must be included.
To improve the low ROE caused by excessive holdings of non-operating assets - one of the core causes of the Korea discount - it is essential to distinguish between operating and non-operating assets (such as cash and real estate for investment purpose) and disclose specific plans for utilizing non-operating assets (investment, shareholder return, etc.) with detailed timelines.
4. Implement an education program for directors
The greatest reason for the lack of investor protection has been the authoritarianism of controlling shareholders and their chairmens’ offices, coupled with the indifference of directors who have lost their independence. Many independent directors are more concerned with pleasing the chairman, CEO, and the key executives for easy reappointment rather than being loyal to the shareholders who elected them. We should create a proper education program for directors without distinguishing between independent and inside directors. Even Chairmen of large corporate groups, such as JUNG Yong-jin of Emart and PARK Hyeon-joo of Mirae Asset, who make key decisions without sitting on the boards, should also be included in the education program. The curriculum should include essential topics for investor protection, such as shareholder rights, board independence, director duty of care and loyalty, and the Bear Hug mechanism (refer to point 8 below). The Forum hopes to play an active role in director education.
5. Establish a Taiwanese-style investor protection center
Even with legislation at the National Assembly, if it does not function in reality, CG reform will not be achieved. In Korea, there are few asset management firms not affiliated with large corporate groups or financial holding companies, making it difficult to expect institutional investors to exercise shareholder rights, and it is even more challenging for individuals to come together to exercise those rights. The litigation process and evidence collection methods are also extremely unfavorable to shareholders. We should note that Taiwan has excellently overcome these issues through the Securities and Futures Investor Protection Center (SFIPC). The Center employs about 20 lawyers who conduct various lawsuits for shareholder protection and safeguard investors. Korea urgently needs an investor protection center. If establishing it as a public institution proves difficult, it could be created with contributions from various pension funds with aligned interests.The Forum will sponsor a conference in Seoul this week to learn more about SFIPC.
6. Improve the procedures for AGM
The extremely formal operation (without much substance) of general meetings of shareholders is one of the most embarrassing issues in Korea's corporate governance. The core issue is extending the notice period for AGM from "14 days" to align with global standards. The notice period is too short, allowing domestic shareholders effectively only about 9 days to voice their opinions, while the Korea Securities Depository (KSD) requires foreign investors to exercise their voting rights 5 business days in advance, reducing the time foreign shareholders have to deliberate and be persuaded. Most advanced countries generally guarantee a minimum period of three weeks, while the Asian Corporate Governance Association (ACGA) recommends 4 weeks. A relevant amendment to the Commercial Code is urgent.
7. Publicly disclose the decision-making process and results of the National Pension Service's Special Committee on Responsible Investment and Governance in charge of key voting decisions
There is a saying among local investors that they should not invest in companies where the National Pension Service (NPS) holds shares. This is because the Special Committee on Responsible Investment and Governance makes important decisions regarding the exercise of voting rights without transparency when there are shareholder proposals. Most proposals, such as amendments to bylaws for stock buybacks or the appointment of auditors representing minority shareholders with absolute majority stakes, are opposed without any explanation, in our view. The committee should, like other national institutions, disclose detailed discussions and minutes. The proportion of governance and investment experts among the committee members is also too low. The proportion of these experts should be increased.
8. Introduce an exit mechanism for severely undervalued listed companies through M&A (the "Bear Hug").
The existence of severely undervalued listed companies with a P/B multiples of less than 0.5x, which can exist indefinitely without any competition for control, is a core factor in the Korea discount. President Lee stated during his campaign in April 2025, "Companies with a P/B of 0.1-0.2x should be quickly liquidated through hostile M&A, as it theoretically offers a ten-fold return on investment; such market inefficiency must be resolved."
In the U.S., Japan, and other advanced countries, when an investor makes a serious acquisition proposal (ie, bona fide offer) to a listed company's board, the board has an obligation to immediately form a special committee and hire advisors to review the proposal, making decisions in the best interest of all shareholders, and all processes are disclosed in detail. Therefore, listed companies that remain undervalued for a certain period are naturally exited through M&A. With the introduction of the duty of loyalty for directors in Korea, the same legal obligations now exist, making it urgent to establish "Guidelines for directors’ conduct during M&A" and to reform the disclosure system to create an exit mechanism for severely undervalued listed companies through M&A.
9. Prohibit the abuse of comprehensive exchanges of shares
The system of comprehensive exchanges of shares, which was originally designed to align the interests of shareholders in a wholly-owned subsidiary, has started to be abused as a means of expelling minority shareholders for ten years. Originally, to forcibly take shares from minority shareholders by providing them with cash, one needed to hold over 95% of the shares. However, since the introduction of cash payment methods for comprehensive exchanges of shares in 2015, a loophole has emerged that allows achieving the same effect with only 66.7% ownership. This loophole is continuously being exploited. Acquisition of Shinsegae Food by Emart (despite strong opposition of the former’s minority shareholders) is a good example. Rapid improvements are necessary. At the very least, the system of comprehensive exchanges of shares for cash compensation should not be applicable to listed companies.
10. Establish a specialized corporate law court similar to Delaware
The lack of proper civil remedies for shareholder rights in Korea is significantly influenced by the low expertise and passive rulings of courts regarding corporate law cases. Despite the very few corporate law cases, they are scattered across national courts, and relevant experiences are not properly accumulated among well-experienced judges. One key reason for the high level of trust in corporate governance in the U.S. is that the Delaware Court of Chancery, where most company headquarters are located, conducts trials and issues rulings at a level comparable to practicing attorneys due to its high knowledge and experience. To quickly realize legislative improvements, such as the delayed duty of loyalty for shareholders, we should actively discuss the establishment of specialized corporate law courts like the patent court and administrative court, which are already successfully operating.
The Forum deeply empathizes with the "Stock Price Suppression Prevention Law," which was proposed by MP Lee So-young in May 2025. It is not uncommon for companies with high controlling shareholder ratios to have stock prices with a P/B multiples of 0.3 - 0.4x. To address this issue, the proposal is that when assessing inheritance tax for companies with a P/B of less than 0.8x, the "stock price" should not be used, but rather the "valuation method for unlisted companies (asset + income fair value assessment)."
Ultimately, to fundamentally resolve CG issues, alignment among four pillars - minority shareholders, the board of directors, management, and controlling shareholders - is necessary. Once all ten key tasks are accomplished, legal and institutional improvements are made, and the attitude of controlling families toward minority shareholders fundamentally changes, a national debate on rationalizing inheritance and gift taxes may also be worth considering.
January 27th, 2026
Korean Corporate Governance Forum
Chairman, Namuh Rhee