Ruling Party to Resolve Korea Discount... "Introducing Bear Hug, Strengthening Stewardship Code"

Efforts to Secure Transparency in Corporate Governance
Consistent Improvements to the Stewardship Code

The Democratic Party of Korea and the government have decided to address the issue of low price-to-book ratio (PBR) companies by promoting policies such as the revision of tax laws, measures regarding corporate mergers and acquisitions (M&A), stewardship codes, and the enactment of laws to prevent stock price manipulation.

On September 29, the Democratic Party’s K Capital Market Special Committee, along with officials from the Financial Services Commission, the Ministry of Economy and Finance, and experts, held a party-government consultation at the National Assembly. O Ki-hyung, who chairs the K Capital Market Special Committee and is an assemblyman from the Democratic Party, stated, "We will consistently improve the stewardship code, focusing on securing transparency in corporate governance and strengthening communication between institutional and long-term investors and company management, in line with our policy objectives."

Assemblyman O introduced the upcoming low PBR disclosure system, scheduled to be implemented in November, and stated, "We will continue our efforts to improve the disclosure system in a consistent manner." He also announced plans to pursue amendments to the Capital Markets Act concerning so-called "bear hug" disclosures, which would make public any takeover bids for low PBR companies whose books are healthy. He added, "I am working to persuade fellow party members in order to ensure the bear hug system is enacted within this year."

O Ki-hyung, Chair of the K Capital Market Special Committee, is giving a opening speech at the "Democratic Party of Korea K Capital Market Special Committee Working-level Party-Government Consultative Meeting" held at the National Assembly Members' Office Building on September 29, 2026. Photo by Yoon Dong-ju

Assemblyman Kim Namgeun stated, "At the end of this year, institutional investors—primarily pension funds and asset management companies—will be evaluated on how actively they have engaged in stewardship activities. Next year, when the National Pension Service outsources asset management, there will be efforts to reduce allocations to underperforming asset management companies and increase those to companies with strong stewardship records, thereby further activating stewardship activities."

They also revealed plans to introduce laws to prevent stock price manipulation. Assemblyman O explained, "Regarding the tax code, both the government and legislators have proposals, and we are seeking alternative solutions. By November, we plan to finalize our approach."

This content was produced with the assistance of AI translation services.