Institutional investors holding equity stakes in Korea’s listed companies will be urged to speak out on key corporate decisions under a draft of new corporate governance guidelines unveiled Monday.

The draft, presented by the bourse operator Korea Exchange and its think tank Korea Corporate Governance Service at a forum in Seoul, is envisioned to replace existing standards for publicly traded companies to follow in areas of shareholder rights, board composition and management, and various other issues pertaining to the way a company is run. 


“The corporate governance code, first introduced in Korea in 1999 after the Asian financial crisis and revised once in 2003, has failed to stay relevant to companies operating in today’s environment,” said Park Kyung-suh, president of the CGS during the forum.

A highlight of key changes in the nonbinding code, the draft contains a new section on institutional investors, urging them to have their say on issues that might affect the company’s value.

“In improving corporate governance practices, institutional shareholders hold the key,” explained Jung Jae-kyu, a senior researcher of CGS.

The CGS plans to solicit opinions from the public and experts by the end of May before finalizing the draft and sending it for final endorsement by its decision-making committee.

By Lee Sun-young (milaya@heraldcorp.com)