Corporate Governance in Korea at the Millennium: Enhancing International Competitiveness-Final Report and Legal Reform Recommendations to the Ministry of Justice of the Republic of Korea 15 May 2000
2001; Volume: 26; Issue: 3 Linguagem: Inglês
ISSN
0360-795X
AutoresBernard S. Black, Barry Metzger, Timothy O'Brien, Young Moo Shin,
Tópico(s)Corporate Insolvency and Governance
ResumoCORPORATE GOVERNANCE IN KOREA AT THE MILLENNIUM: ENHANCING INTERNATIONAL COMPETITIVENESS* FINAL REPORT AND LEGAL REFORM RECOMMENDATIONS to the Ministry of Justice of the Republic of Korea 15 May 2000 With an Introduction to the Report by Bernard Black** The core of this article is our May 2000 Report to the Ministry of Justice of the Republic of Korea. The Report reviews South Korea's corporate governance system and recommends legal reforms to improve Korean corporate governance and protect against a repeat of Korea's governance-related financial crisis of 1997-1998. The Report's principal recommendations include enhancing the role of public company boards of directors, strengthening independent director and non-interested shareholder review of related party transactions, and requiring cumulative voting and preemptive rights for public companies. The Introduction by Bernard Black that precedes the Report discusses the ongoing transition in Korean corporate governance, and the political and economic forces behind that transition. Prepared By the Financial and Corporate Restructuring Assistance Project INTRODUCTION (by Bernard Black): KOREAN CORPORATE GOVERNANCE IN TRANSITION The Report that follows this Introduction was prepared for the Ministry of Justice of South Korea as part of a World Bank funded project. It describes the current state of Korean corporate governance and recommends various reforms, principally through amendments to the Korean Commercial Code, which contains the Korean company law. The Report's proposals would bring Korea's company law up to world-class corporate governance standards. If fully adopted (which isn't politically likely), they would put Korea ahead, in many respects, of Japan and many Western European countries. The Report focuses on company law. This is not because we believe that the company law should be a principal focus of Korea's corporate governance reform efforts. Our focus on company law reflects instead the practical reality that our client was the Ministry of Justice. The Ministry of Justice can propose changes to the Commercial Code, but not to the Securities Law (which is within the domain of the Korean Ministry of Finance and Economy), the antitrust rules, or the accounting rules. Bureaucratic turf issues like these complicate capital market reform efforts in Korea and many other countries. Korean Corporate Governance and the Asian Financial Crisis It's useful to put the current state of Korean corporate governance in the broader context of Korea's decades-long transition from a poor, agricultural economy to a major developed nation. In 1960, Korea was a third-world country, with per capita Gross Domestic Product (GDP) under $100. Today, it is the world's eleventh largest economy and seventh largest exporter, with per capita GDP over $10,000. Its major firms compete at world-class levels in a number of important industries, including automobiles, construction, consumer electronics, and semiconductors. Many Korean brands are household names in the United States, including Hyundai, Lucky, Goldstar, and Samsung. Korea's political environment has also changed radically, and peacefully. In 1960, Korea was a military dictatorship. Today, it's a democracy, led by a President who was a leading dissident during the dictatorship period. To get this far, this fast, Korea had to do many things right. Indeed, there is no more striking example of how government policies can affect economic development than the contrast between South Korea and North Korea. While South Korea flourished, North Korea floundered under Communist dictatorship, and today is desperately poor, with widespread starvation during the past decade. In corporate governance, Korea again did many things right. Its company law and securities law, after major overhauls of both laws in 1995-1996, and important incremental changes since then, provide near-world-class investor protection. …
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