Director of the Democracy Research Institute: "3% Rule Still Unchanged... Possibility of Companies Accepting Punitive Damages Exclusion"

Hong Ik-pyo, a member of the Democratic Party of Korea (Director of the Democratic Research Institute), is giving a greeting at the party and economic sector policy meeting related to the Three Fair Economy Acts held at the Korea Federation of Small and Medium Business in Yeongdeungpo-gu, Seoul on the 15th. Photo by Kang Jin-hyeong aymsdream@

[Asia Economy Reporter Park Cheol-eung] Hong Ik-pyo, a member of the Democratic Party and head of the Democratic Research Institute, stated regarding the "3% rule" and other economic three laws, "We will review them with an open mind, but there is no change in our position yet." The Democratic Research Institute, the think tank of the Democratic Party, held a meeting yesterday with research institutes of large corporations and economic organizations regarding the economic three laws.

Rep. Hong said, "There is no change in any measures, including the 3%. However, if the business community presents reasonable proposals and the issues are practically confirmed, we will approach modifications with an open mind." When asked, "Is there absolutely no special change in circumstances that would alter the party's position?" he replied, "Not yet."

The government proposal, which opposes the current method of selecting audit committee members from among directors and instead elects them separately, and limits voting rights by "combining" the shares of the largest shareholder and related parties to 3%, is the most opposed by the business community. Rep. Hong said, "There have been cases where 5% or even severely 10% were discussed. However, nothing specific like 5% or 10% was mentioned yesterday, and the corporate side presented various problems that would arise if the limit were 3%."

He emphasized that concerns about threats to management rights are groundless. Rep. Hong said, "The 3% limit on shareholder rights is related to the separate election of audit committee members and does not apply to all other decision-making. The claim that management rights would be transferred is an excessive criticism and is not true."

Regarding the collective lawsuit system and punitive damages outside the three laws, he said, "They have not been finalized yet," and added, "The collective lawsuit system should have originally been included, but since it was not included when the government proposed the bill this time, the possibility of including it seems low."

He continued, "After further discussion, it seems difficult to handle it in this regular session of the National Assembly, and it is something to be discussed next time," and said, "If the punitive damages system is introduced, civil liability should be strictly enforced in parallel, and I think the business community may accept it. That discussion also took place yesterday."

Rep. Hong said, "The current principle is to discuss based on the bill submitted by the government and handle it within the regular session," and added, "The National Assembly should have sufficient discussion, but the final decision is basically made by majority vote."

Regarding the Serious Accidents Punishment Act, he said, "Representative Lee Nak-yeon also said he would review this issue proactively, so I hope it will be handled within this regular session if possible, and I understand the party is also actively reviewing this issue."