People Power Party: "Democratic Party's Commercial Act May Break Korea Companies' Bridge, Not a Korea Booster"

Sanghoon Kim, Chairman of the Policy Committee
"Democratic Party Should Stop Excessive Amendments"
"Discussions Needed to Ensure Shareholder Benefits and Strengthen Competitiveness"

Kim Sang-hoon, the Policy Committee Chair of the People Power Party, criticized the amendment to the Commercial Act adopted as the party line by the Democratic Party of Korea on the 15th and called for in-depth discussions between the ruling and opposition parties.

At the People Power Party's floor strategy meeting held at the National Assembly that day, Chair Kim stated, "Regarding the Democratic Party's decision to push forward the amendment to the Commercial Act as the party line, eight economic organizations representing large corporations, mid-sized companies, and small and medium enterprises alike have clearly opposed it, saying that a premature amendment to the Commercial Act would lead to a flood of lawsuits against directors and act as a law encouraging overseas speculative capital to flee."

The day before, the Democratic Party adopted an amendment to the Commercial Act as the party line at a party members' meeting, which specifies the fiduciary duty of directors to shareholders. Additionally, for large listed companies with total assets exceeding 2 trillion won, the amendment requires the introduction of cumulative voting in the director appointment process and mandates that at least two audit committee members be elected separately from other directors. Furthermore, the title of outside directors was changed to independent directors, and provisions for electronic shareholders' meetings were also established.

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 cooperation body at the National Assembly on the 10th. Photo by Kim Hyun-min kimhyun81@

He introduced, "The Korea Economic Association even released a scenario analysis result stating that if the Democratic Party-style amendment to the Commercial Act materializes, the majority of the boards of directors of 4 out of the top 10 companies and 8 out of the top 30 companies in Korea could fall under the control of foreign institutional investor coalitions," adding, "I believe that the Democratic Party's reckless push for the amendment to the Commercial Act is not a Korea Booster Project but a project that could break Korea and its companies."

Chair Kim pointed out, "Specialized committee members of the National Assembly's Legislation and Judiciary Committee and the Political Affairs Committee expressed opposition in their bill review reports, citing unclear concepts of controlling shareholders, inconsistencies with the existing legal system, and the potential to hinder swift corporate decision-making, recommending a cautious approach," and added, "How can directors protect the interests of all shareholders, including major shareholders, minority shareholders, institutional investors, private equity funds, and hedge funds, whose interests are completely different? It is logically contradictory." He continued, "When our companies, fiercely competing in the global market, are exposed to battles for management rights by hedge funds or international corporate raiders, the interests of minority shareholders will ultimately be harmed."

Regarding this, he introduced, "The People Power Party and the government are discussing and reviewing measures to protect good-faith stock investors and minority shareholders during mergers and acquisitions between companies."

He also urged that related discussions be held between the ruling and opposition parties. Chair Kim said, "I request the Democratic Party to stop the reckless and hasty push for the amendment to the Commercial Act for now and hope that the ruling and opposition parties can sit down together and have in-depth discussions on ways to guarantee shareholder interests and enhance corporate competitiveness."