The chief of South Korea's financial watchdog on Wednesday called for a change to the way large local businesses are managed, also stressing the need to promote shareholders' rights. Lee Bok-hyun, head of the Financial Supervisory Service, insisted that the way local businesses are run contrasts with global standards, noting the interests of business owners or founders are often prioritized before those of other shareholders. "A unique corporate governance structure has formed over the years in South Korea as local businesses expanded at a faster rate than the rate business owners accumulated capital," Lee said in congratulatory remarks delivered at a Seoul seminar on corporate governance. "Such a corporate governance structure is viewed as the driving force that enabled the country's rapid development, but, ironically, is also considered an obstacle to the development of the country's capital market," he added. The FSS chief insisted that what he called a "contradiction" in the little stake owned by a b usiness owner and the disproportionately great rights enjoyed by the owner may be a source of the so-called Korea discount, a phenomenon where South Korean shares are valued less than their fundamentals. To remove such a contradiction, local businesses and their management must work to enhance the rights of their shareholders in line with global standards, he argued. "Especially, we need a corporate governance structure where the exercise of shareholders' rights is protected and promoted to ensure the equitable treatment of all shareholders," Lee told the seminar. "To develop our capital market, we desperately need a new corporate governance structure where all shareholders can equitably share the performance of their business, and the Korea discount will finally end when there is faith that the rights of any shareholder will equally be protected as those of controlling stakeholders," he added. Source: Yonhap News Agency