Financial holding company chiefs could win third term with 75% shareholder approval

South Korea's financial regulator is pushing to curb the long-term tenure of financial holding company chiefs by raising the approval thresholds required for nomination and shareholder votes with each successive term.

According to financial and political sources, the Financial Services Commission briefed Democratic Party of Korea lawmakers on the National Assembly's Political Affairs Committee on Monday on a proposed overhaul of corporate governance rules for financial firms.

The core of the proposal is a tiered approval system that applies progressively stricter consent requirements at each stage of the appointment process, depending on how many terms a chair has already served.

For an initial appointment, a candidate must secure the support of at least two-thirds of the executive candidate recommendation committee's members. At the subsequent shareholder meeting, approval requires a majority of voting rights held by attending shareholders and at least one-quarter of total issued shares.

The bar rises for a first re-election bid. The recommendation committee must back the candidate with at least three-quarters of its members, while the shareholder meeting requires approval from holders of at least two-thirds of attending voting rights and at least one-third of total issued shares.

For a third term, the recommendation committee threshold stays at three-quarters, but the shareholder meeting requirement climbs further — the candidate must win support from holders of at least three-quarters of attending voting rights and more than half of all issued shares.

The FSC had initially considered an outright legal ban on third terms, but is understood to have shifted toward a graduated approach that tightens voting requirements with each renewal rather than imposing a blanket prohibition.

The proposal also calls for the recommendation committee chair to appear in person at the shareholder meeting to explain the rationale behind a candidate's nomination. Regulators are also considering bringing the committee chair under the scope of the accountability framework known as the responsibility map.

The FSC's governance reform plan is expected to be finalized after consultations between the government and the ruling party.

Meanwhile, current financial company governance law requires firms to set out the principles and procedures for CEO succession in their internal rules. However, many of the specific practices the Financial Supervisory Service has recently emphasized — including how candidate pools are formed, how long vetting periods should last, and whether an incumbent CEO's re-election is appropriate — remain closer to best-practice guidelines than binding legal obligations.