The National Assembly in Seoul / Korea Times file

The Asian Corporate Governance Association (ACGA) has urged Korea's National Assembly to quickly pass the proposed revision of the Commercial Act, aimed at broadening the fiduciary duties of corporate directors to encompass accountability to shareholders.

ACGA, a non-profit organization headquartered in Hong Kong, works to improve corporate governance across Asia.

It has 101 members, including pension funds, sovereign wealth funds, asset management firms, and investment banks operating in 18 global markets. The total assets managed by its pension fund and asset management members reach $40 trillion.

According to officials from the financial investment industry, ACGA recently expressed support for the amendment to the Commercial Act in a letter, emphasizing the need to clarify the responsibilities of directors not only to the company, but also to all shareholders.

The organization emphasized that the amendment would help establish a stronger and more effective board of directors capable of realizing shareholder value, stating that this would be a crucial step for Korean companies to regain the trust of foreign investors.

The letter criticized governance practices among Korean companies controlled by large, family-owned business conglomerates, highlighting issues such as group restructuring, mergers and the misuse of treasury shares. It pointed out that these practices often seem to be designed to benefit top management or controlling shareholders, frequently at the expense of minority shareholders.

The organization added that its members, who have been long-term investors in Korea, are disappointed by these unfair practices that have persisted over decades, highlighting that the Korean market stands at a crossroads, facing the choice of whether to develop corporate norms or continue with outdated practices.

Additionally, ACGA expressed concerns about the shrinking weight of the Korean market in the Morgan Stanley Capital International (MSCI) Emerging Markets Index, which has dropped from 16.1 percent in 2014 to 9.1 percent this year. If this decline continues, it could damage external perceptions of the Korean market, the organization noted.