By Yoon Ja-young
In the past Chaebol chairmen were able to appoint anybody they wanted as executives of the groups' financial arms, but they won't be able to continue that practice.
The Financial Services Commission (FSC) said Monday that with the corporate governance code taking effect on Dec. 10, financial companies will have to disclose details such as the executive candidate's career and reasons why he or she is recommended for the post through an executive recommendation committee.
Financial businesses with more than 2 trillion won in assets will be subject to the code. They include all financial holding companies, as well as most of the financial arms of the country's chaebol, such as Samsung, Hyundai, Hanwha and Dongbu.
Samsung Group, for instance, has Samsung Life Insurance, Samsung Fire& Marine Insurance, Samsung Securities, Samsung Card and Samsung Asset Management. Hanwha has a life insurer, securities firm and asset management; while Dongbu has life and non-life insurers, as well as a securities company.
The chaebol chairmen and management have been de facto appointing any group executive to head financial arms, regardless of the appointees' expertise in financial matters. As a consequence, many of the financial subsidiaries of chaebol are often headed by those without careers in the financial sector.
With the implementation of the corporate governance code, however, financial companies will have to first organize an executive recommendation committee. The committee will decide the qualifications required for the executive, then recommend a candidate and examine whether he or she fits those qualifications.
Prior to the annual shareholders' meeting, it will then have to make public why a person was recommended for the post, as well as his or her detailed resume that proves the person's expertise. Those without expertise in financial business will be de facto barred from the post.
"As it will include information such as where the candidate has previously worked and what achievements he or she has made, one can judge whether the person is qualified for an executive post," an official at the FSC explained.
The financial companies, however, are not happy about the measure. They point out that it may infringe on the rights of shareholders guaranteed by commercial law.
In the past Chaebol chairmen were able to appoint anybody they wanted as executives of the groups' financial arms, but they won't be able to continue that practice.
The Financial Services Commission (FSC) said Monday that with the corporate governance code taking effect on Dec. 10, financial companies will have to disclose details such as the executive candidate's career and reasons why he or she is recommended for the post through an executive recommendation committee.
Financial businesses with more than 2 trillion won in assets will be subject to the code. They include all financial holding companies, as well as most of the financial arms of the country's chaebol, such as Samsung, Hyundai, Hanwha and Dongbu.
Samsung Group, for instance, has Samsung Life Insurance, Samsung Fire& Marine Insurance, Samsung Securities, Samsung Card and Samsung Asset Management. Hanwha has a life insurer, securities firm and asset management; while Dongbu has life and non-life insurers, as well as a securities company.
The chaebol chairmen and management have been de facto appointing any group executive to head financial arms, regardless of the appointees' expertise in financial matters. As a consequence, many of the financial subsidiaries of chaebol are often headed by those without careers in the financial sector.
With the implementation of the corporate governance code, however, financial companies will have to first organize an executive recommendation committee. The committee will decide the qualifications required for the executive, then recommend a candidate and examine whether he or she fits those qualifications.
Prior to the annual shareholders' meeting, it will then have to make public why a person was recommended for the post, as well as his or her detailed resume that proves the person's expertise. Those without expertise in financial business will be de facto barred from the post.
"As it will include information such as where the candidate has previously worked and what achievements he or she has made, one can judge whether the person is qualified for an executive post," an official at the FSC explained.
The financial companies, however, are not happy about the measure. They point out that it may infringe on the rights of shareholders guaranteed by commercial law.
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