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Corporate boards' fiduciary duty should be to shareholders: FSS head

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By Lee Kyung-min
Financial Supervisory Service (FSS) Gov. Lee Bok-hyun speaks during a briefing at the FSS. Yonhap

Financial Supervisory Service (FSS) Gov. Lee Bok-hyun speaks during a briefing at the FSS. Yonhap

Financial Supervisory Service (FSS) Gov. Lee Bok-hyun called for expanding the scope of a board of directors' fiduciary duty to include shareholders and scrapping criminal punishment for breach of trust by corporate executives under Korea's commercial law on Friday.

The move aims to restrict corporate boards railroading at the expense of minor shareholders. It instead seeks to lift the burden of potential stint in prison for top executives undertaking high-risk high-stakes business decisions.

Many in the business community say the revision reflects concerns of a greater number of frivolous criminal lawsuits that have long frustrated their corporate activities.

In his view, strengthening shareholder protections and the penalty provisions for breach of trust by corporate executives should be given equal priority.

"Challenges abound, but criminal punishment should be warranted with the clear evidence of misconduct," he said during a briefing at the FSS. "Instances include seeking personal gains, among definitions of the offense to be revised."

Monetary compensation in a civil court is far more preferable and more appropriate than an outright indictment, he added.

"Criminal punishment for breach of trust is disproportionate to the offense in the context of commercial law. The priority objectives should be more about predictability, not penalties."

Lee Kyung-min lkm@koreatimes.co.kr


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