Korean Corporate Governance Forum Criticizes Government's Value-up Initiatives, Endorses Opposition's Corporate Governance Reforms

In an opinion issued on July 27, 2024, the Korean Corporate Governance Forum lowered its rating of the government's "Value-up" initiatives from a B- to a C grade.* The Forum expressed disappointment with the Government's decision to delay amendments to the Commercial Code, which would have strengthened protections for shareholders. In the same opinion, the Forum criticized the 2024 Tax Reform Proposal, arguing that it primarily benefits the wealthy while failing to address the underlying issues of weak corporate governance that contribute to the "Korea discount." Despite acknowledging some positive tax incentives for shareholder returns, the Forum found that the proposed measures are too limited and short-term to drive substantial improvements in the capital market and omit broader reforms, such as mandatory share buybacks and enhanced stewardship by the National Pension Service (NPS).

* In February 2024, South Korea’s government and stock exchange outlined a set of Corporate Governance measures dubbed “Value-up”, kicking off a potential multi-year overhaul process of corporate governance, tax and other laws and regulations.