South Korea Moves To Overhaul Corporate Governance Laws

In a move that could reshape the landscape of South Korea’s corporate world, the Ministry of Justice and the National Assembly are preparing sweeping amendments to the nation’s Commercial Act. As the country’s lawmakers and legal experts gear up for a pivotal National Assembly session on August 25, 2025, the focus is clear: bolster shareholder rights, tighten corporate governance, and pave the way for stronger ESG (Environmental, Social, and Governance) management standards. The proposed changes, already stirring robust debate, are expected to have far-reaching implications for businesses, investors, and the legal community alike.

At the heart of this reform effort is a commitment to strengthening the very foundation of South Korean corporate governance. According to Money Today Broadcasting, the Ministry of Justice’s revision of the Commercial Act is designed to support ESG management and drive practical improvements in how companies are run. The Ministry’s stated goal is to complete the revision process smoothly, steering clear of major controversies and ensuring the changes deliver real value to both companies and shareholders.

These reforms come at a time when the government and National Assembly are under increasing pressure to address persistent issues in the country’s corporate sector. For years, disputes over mergers, acquisitions, and the rights of minority shareholders have plagued the business landscape, often leading to high-profile legal battles and eroding investor confidence. The Commercial Act amendments are seen as a direct response to these challenges, aiming to clarify the rules of the game and provide a more level playing field for all stakeholders.

During the recent 6th ESG Economic Forum, organized by Money Today Broadcasting, industry leaders and policymakers gathered to discuss the potential impact of the upcoming amendments. Yoo Seung-ho, CEO of Money Today Broadcasting, didn’t mince words about the significance of the changes. "The Commercial Act amendment will change every aspect of corporate management, including decision-making, board operations, and shareholder relations," Yoo said. "Given that the foundation of the Korean economy lies in corporate competitiveness, the Commercial Act amendment will have profound significance for our economy."

Experts at the forum expressed optimism that the new rules would finally address long-standing conflicts between controlling shareholders and minority investors. Historically, minority shareholders have often found themselves sidelined during key decisions like mergers or company splits, leading to accusations of unfair practices. The new amendments, however, are expected to shift the balance of power, making boards more accountable to shareholders and enhancing transparency across the board.

The first phase of the Commercial Act revision has already passed, signaling a shift from a company-centric to a shareholder-centric approach in board decision-making. The next phase, scheduled for a vote in the National Assembly on August 25, promises even more sweeping changes. Among the headline proposals: mandatory cumulative voting for large listed companies and an increase in the minimum number of separately elected audit committee members to two. These measures are designed to prevent dominant shareholders from steamrolling minority interests and to ensure that audit committees operate with greater independence.

Lee Jeong-moon, a member of the Democratic Party and a key proponent of the reforms, emphasized the broader goals behind the legislation. "The will to improve the previously tilted playing field of corporate governance, which was dominated by opaque controlling shareholders, and to strengthen the transparency of the capital market is reflected in these amendments," Lee stated. "We hope that the Commercial Act amendments and subsequent discussions will help usher in the era of KOSPI 5000."

As the legislative machinery moves into high gear, the legal community is also mobilizing to help companies navigate the coming changes. Law firm Lin, a major player in corporate law and litigation, established a dedicated task force (TF) in May 2025 to address the evolving regulatory environment. The TF, composed of seasoned lawyers and former prosecutors with backgrounds in top law firms like Kim & Chang, has made it their mission to provide tailored legal advice on everything from risk management to shareholder meetings and investor relations.

Im Jae-yeon, a leading attorney at Lin, articulated the TF’s dual focus: "The Commercial Act amendment will have a significant impact on corporate governance and management activities going forward, and we expect a surge in related legal disputes. Our goal is to provide customized legal advice to help companies manage these risks and support their growth." The TF isn’t just waiting for clients to come to them—they’re actively reaching out to listed companies, offering seminars and practical guidance to ensure businesses are prepared for the new regulatory landscape.

With experts in M&A, in-house counsel, and investor relations on board, the TF prides itself on its ability to offer holistic legal support. Sung Hae-kyung, another TF member, highlighted the group’s breadth: "Our team includes not only M&A experts but also in-house lawyers and IR professionals, enabling us to provide comprehensive legal support and practical advice in response to the Commercial Act amendments." The TF has even invited Professor Lee Sang-hoon of Kyungpook National University Law School, a key architect of the theoretical foundation for the amendments, to lead internal seminars and ensure their interpretations remain cutting-edge.

Beyond the legal world, the business sector is bracing for the ripple effects of the reforms. Companies are already reviewing their internal control systems, compliance policies, and governance frameworks to align with the anticipated changes. The TF at Lin is also working closely with government relations (GR) teams to provide clients with real-time updates on legislative trends and regulatory shifts. Kim Sang-man, another prominent TF attorney, summed up their approach: "We will respond nimbly to the rapidly changing legal market and continue to expand the scope of client support."

As the August 25 National Assembly session approaches, anticipation is mounting. The Ministry of Justice and the TF at Lin both expect to finalize their respective proposals and recommendations in time for the session, ensuring that lawmakers have the benefit of both policy and practical expertise as they debate the fate of the Commercial Act amendments.

For many in the business community, the stakes couldn’t be higher. The hope is that these reforms will not only strengthen shareholder rights and improve transparency but also boost the overall competitiveness of South Korean companies on the global stage. If successful, the changes could help erase the so-called "Korea discount"—the tendency for Korean companies to trade at lower valuations due to governance concerns—and unlock new opportunities for growth and investment.

As lawmakers, lawyers, and business leaders converge on Seoul for what promises to be a landmark session, all eyes are on the future of corporate governance in South Korea. Whether these sweeping reforms will deliver on their ambitious promises remains to be seen, but one thing is certain: the conversation about how companies are run—and who they serve—is about to enter a bold new chapter.