Lee Jae-myung Faces Business Community Backlash... "Will Be Charged with Breach of Trust"
Democratic Party Tries to Mend Differences... "Not Intended to Abolish Commercial Law"
Lee Jae-myung, leader of the Democratic Party of Korea, who had been emphasizing the revision of the Commercial Act, mentioned targeted adjustments such as amendments to the Capital Markets Act. There is discord within the party due to his 'rightward shift' attempt that does not align with the party's official stance.
Lee Jae-myung, leader of the Democratic Party of Korea, is speaking at the on-site meeting of the Task Force for Revitalizing the Korean Stock Market held at the Korea Exchange in Yeouido, Seoul, on the 28th. Photo by Kim Hyun-min
On the 28th, at the 'Korea Stock Market Revitalization Task Force (TF) On-site Meeting' held at the Korea Exchange in Yeongdeungpo-gu, Seoul, Lee said, "Originally, it is accurate and appropriate to amend the Capital Markets Act, but since it falls under the jurisdiction of the National Assembly's Political Affairs Committee chaired by the ruling party, it is unlikely to happen," adding, "It may be preferable to regulate only publicly registered companies rather than amending the Commercial Act." He also emphasized, "If a rational, targeted regulation of the Capital Markets Act, as advocated by the business community, is implemented, there may be no need to amend the Commercial Act."
Lee appears to have attempted a rightward shift by responding positively to the government's policy of choosing to amend the Capital Markets Act instead of the Commercial Act. The People Power Party also welcomed Lee's remarks. On the 29th, Kim Sang-hoon, the policy chief of the People Power Party, said, "Lee's statement acknowledges the side effects and impracticality of the Democratic Party-style push for Commercial Act revision," adding, "If the Democratic Party accepts the concerns of companies and the market and halts the push for Commercial Act revision to engage in discussions on amending the Capital Markets Act, it will send a significantly positive signal to the market."
Until now, Lee had promised to revise the Commercial Act within this regular session of the National Assembly and pressured the government and ruling party several times. According to Democratic Party press releases, from the 4th to the 28th, Lee mentioned the revision of the Commercial Act and corporate governance in 9 out of 31 official occasions. In the party's Supreme Council meetings, where topics are relatively free, he brought up corporate governance improvement 5 times out of 10. Last month, Lee did not mention corporate governance in the Supreme Council meetings. On the 4th, he stated at the Supreme Council meeting, "The Democratic Party will make every effort in legislation, including the revision of the Commercial Act, so that the stock market can recover normally and companies' fundraising and public investment means can be established."
However, signs of retreat regarding the Commercial Act revision appeared earlier due to concerns about backlash from the business community. On the 20th, at a 'General Investor Meeting for Stock Market Revitalization' held at a caf? in Yeouido, Seoul, Lee said, "If the duty of loyalty of directors is expanded to general shareholders, every decision made by the company could be subject to embezzlement charges," adding, "Can company management be possible under such circumstances? General shareholders should also consider the management's position." General shareholders attending the meeting opposed Lee's remarks. A Kwang-hwa Uh, operating committee member of the Doosan Enerbility Shareholders' Coalition, said, "The level of the Korean people is not so low as to recklessly file embezzlement charges," and earnestly requested, "Please revise the Commercial Act without trembling at the business community's exaggerations."
The Democratic Party is hastily trying to manage the discordant moves of Lee. After the on-site meeting the previous day, the Democratic Party's Stock Market Revitalization TF explained to reporters that Lee's remarks did not imply that the revision of the Commercial Act was unnecessary. Democratic Party lawmaker Kim Nam-geun said, "The expansion of directors' duty of loyalty and strengthening of directors' expertise should be done through the revision of the Commercial Act, while the introduction of protection methods against shareholder damage caused by physical division, etc., should be done through the amendment of the Capital Markets Act," adding, "If only the Capital Markets Act is amended without the Commercial Act, the damage and blind spots for general shareholders will become widespread."
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