The Ruling Party Rolls Up Sleeves for Commercial Law Revision... "Considering Legislator-Initiated Bills"

與 "Duty of Loyalty to Shareholders Should Be Negotiated to Protect Shareholder Interests"
Opposition "Government Proposal on Duty of Effort Is a Step Forward"

The ruling party has begun a full-scale review of the Commercial Act amendment package confirmed by the government. Once the positions between the ruling party and the government are aligned, the Commercial Act amendment, primarily focused on 'protecting shareholders' interests,' is expected to be actively discussed in the National Assembly. However, recent conflicts between the ruling party and the government have hindered smooth communication, and ongoing issues such as the existence of the financial investment consumption tax and the Myung Taegyun issue between the ruling and opposition parties could pose variables.

Kim Sang-hoon, Chairman of the Policy Committee of the People Power Party, is holding a press briefing on the ruling and opposition parties and government consultation body at the National Assembly on the 10th. Photo by Kim Hyun-min kimhyun81@

On the 15th, Kim Sang-hoon, the Policy Committee Chair of the People Power Party, told Asia Economy in a phone interview that they are "reviewing both the government’s proposed amendments to the Commercial Act and Capital Markets Act package and the lawmakers’ legislative bills for consolidated review." Regarding the direction of the amendments, Chair Kim said, "The duty of loyalty to shareholders should be discussed with the opposition party as it relates to protecting shareholders' interests."

As the ruling party reviews the government proposal and expresses intentions to pursue separate legislative bills, the opposition party has also begun evaluating the government’s proposal in comparison to their own submitted amendments. Opposition lawmakers, including those from the Democratic Party, have introduced numerous Commercial Act amendments emphasizing the protection of shareholders' interests since the 22nd National Assembly.

Lee Yong-woo, a former Democratic Party lawmaker who led discussions on the Commercial Act amendments in the 21st National Assembly by proposing an amendment to include 'proportional interests of shareholders' in the directors' duty of loyalty, evaluated the government proposal as "a half-step forward." He said, "The original government proposal will not pass as is in the National Assembly review, so through negotiations, the remaining half-step can be taken." Lee added, "The fact that the government has submitted a proposal is important," and predicted, "Since the opposition already has several Commercial Act amendments, the ruling and opposition parties along with the government can seek practical solutions through coordination."

However, within the opposition party, while there is agreement on the Capital Markets Act amendments being pursued as a package with the Commercial Act, some voices argue that the Commercial Act amendment containing the 'duty of effort' is actually a regression compared to previous discussions. A Democratic Party lawmaker on the Political Affairs Committee, who requested anonymity, criticized, "The duty of effort is merely a declarative legal provision without practical effect," adding, "While the duty of effort might emerge as a compromise at the last moment during discussions on the Commercial Act amendment, it was never intended to be pursued from the start."

Meanwhile, our outlet reported yesterday that, separate from the current Commercial Act provision requiring directors to act loyally for the company, the government has prepared a Commercial Act amendment adding a clause to 'make efforts to protect shareholders' interests.' In addition to the Commercial Act, the government plans to enact the Capital Markets Act as a package law to protect the interests of common shareholders who are at a disadvantage due to information asymmetry and other factors.