The federation came under fire as chief executives of member conglomerates such as Samsung, Lotte and SK Group were allegedly involved in the corruption scandal involving impeached President Park Geun-hye.

In terms of major reforms, the new FKI will scrap the chairman's decision-making council and instead set up a board of management directors' meeting to reach an agreement on key decisions for the interest of member companies, the lobby group said in a statement.

Over the past five decades, major decisions have been made by a small number of business leaders "without seeking a consensus" among the 550 member companies, an official familiar with the organization said.

If professional managers from member companies take part in core decisions, it will help generate some positive changes to the FKI, the insider, who declined to be identified said. 

"With the top four conglomerates -- Samsung, Hyundai Motor Group, SK and LG groups having recently withdrawn from the FKI, however, it remains to be seen whether the reforms will work as planned because more members may leave the lobby group," the official said.

In other efforts, the new FKI will also close the department that was in charge of social projects in cooperation with member firms as it often led to collusive ties between business and politics, the statement said.

"We will cut more than 40 percent of our budget and workforce under the reform measures. And we will put a bigger focus on strengthening our role as a think tank to advise economic policies for the government," he said.

The FKI also plans to disclose its financial statements twice a year. All the reforms sought by the FKI require approval at the board of directors' meeting, the statement said. (Yonhap)