'Major CEOs Urgent Statement for the Rejump of Korean Economy'
First CEO Urgent Statement Led by Hankyungyeop in 9 Years... "Opposition to Commercial Act Amendment"
"Capital Market Act Amendment with Improved Merger Ratio Calculation Method is Sufficient"
On the 21st, the presidents of 16 major domestic groups including Samsung, SK, Hyundai Motor, and LG issued an urgent statement requesting the Democratic Party of Korea to halt legislative discussions on the proposed amendment to the Commercial Act. This is the first time in about nine years since 2015 that major corporate presidents have issued an urgent statement concerning the Korean economy.
The Korea Economic Association hosted the "Urgent Statement by CEOs of Major Companies for the Rebound of the Korean Economy" on the 21st at Lotte Hotel in Seoul. After the reading of the statement by Kim Chang-beom, Executive Vice Chairman (fifth from the left in the front row), the attending company CEOs are taking a group photo. Photo by Heo Young-han
At the Lotte Hotel in Sogong-dong, Seoul, the presidents delivered an urgent statement titled "Urgent Statement by Major Corporate Presidents for the Re-advancement of the Korean Economy," expressing concerns that "if the amendment to the Commercial Act, which includes the expansion of directors' fiduciary duties, passes, many companies will suffer from excessive litigation and attacks by foreign speculative capital, making it difficult to operate boards of directors normally and causing significant difficulties in discovering new growth engines." They further emphasized that "corporate competitiveness will inevitably be severely damaged, leading to a value-down of our stock market."
Attending the statement announcement were executives from 16 groups, including Park Seung-hee, President of External Cooperation (CR) at Samsung Electronics; Lee Hyung-hee, President and Chairman of the Communication Committee at SK Supex Council; Kim Dong-wook, Vice President of Hyundai Motor Company; Cha Dong-seok, President of LG Chem; and Lee Dong-woo, Vice Chairman of Lotte Holdings.
Kim Chang-beom, Executive Vice Chairman of the Korea Economic Association, explained, "It is unusual for the presidents of 16 groups to jointly express their position," adding, "This is because they judged the amendment to the Commercial Act as a critical issue for the Korean economy."
Earlier, the Democratic Party of Korea proposed an amendment to the Commercial Act adding the clause that "directors must protect the interests of the majority shareholders in performing their duties and treat the interests of all shareholders fairly," and adopted it as party policy. Although the intent is to clarify directors' responsibilities and strengthen shareholder protection, companies strongly oppose it, arguing that it could increase legal disputes and risks of management rights infringement.
The presidents declared full opposition to the three core provisions of the amendment?expansion of directors' duties related to shareholder interests, separate election of audit committee members, and mandatory cumulative voting?citing concerns that these could cause significant disruptions to overall corporate management.
While acknowledging the need to improve systems to protect minority shareholders during corporate restructuring, they argued that targeted improvements to the Capital Markets Act would be more appropriate than amendments to the Commercial Act.
Vice Chairman Kim stated, "By changing the method of calculating merger ratios to reflect actual value, the interests of minority shareholders who could be harmed by specific cases should be protected," and pointed out, "The expansion of directors' fiduciary duties and the clause protecting majority shareholders' interests included in the Democratic Party's amendment to the Commercial Act should be excluded from legislative discussions."
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