Business Community Issues Appeal
Renews Call for Withdrawal of Opposition's Commercial Act Amendment
Urges Discussion on Revising the Capital Markets Act
The business community has once again urged the withdrawal of the current opposition party's proposed amendment to the Commercial Act and suggested revising the Capital Markets Act as an alternative.
The Democratic Party of Korea's policy debate held in the National Assembly on the topic of "How to Amend the Commercial Act." Photo by Kim Hyun-min
On the 23rd, eight economic organizations including the Korea Economic Association, the Korea Chamber of Commerce and Industry, the Korea Federation of Small and Medium Business, the Korea Employers Federation, the Korea International Trade Association, the Korea Federation of Medium-sized Enterprises, the Korea Listed Companies Association, and the KOSDAQ Association issued an "Appeal from the Business Community to Urge Discussion on Amendments to the Capital Markets Act" containing this message.
The eight economic organizations pointed out, "Our companies are on the brink due to the weakening competitiveness of key industries, sluggish discovery of new growth engines, and the spread of Trump-era protectionism," adding, "Amending the Commercial Act to expand directors' fiduciary duties, mandate cumulative voting, and expand separate election of audit committee members would cause serious side effects to the economy and businesses in this critical crisis."
They continued, "The proposed amendments to the Commercial Act would cause significant confusion in the corporate field by encouraging excessive litigation against directors, threatening corporate management rights, and shrinking investments and mergers and acquisitions aimed at discovering new growth engines," adding, "Ultimately, the national economy will experience value down, and the damage will affect both the public and companies."
Instead, these organizations proposed revising the Capital Markets Act to protect minority shareholders' interests, which is the goal of the Commercial Act amendment. They stated, "The business community appeals that the amendment to the Commercial Act could cause considerable disruption to overall corporate management, and if there are problematic parts, it is appropriate to introduce pinpoint regulations in the Capital Markets Act," and added, "We urge the suspension of the Commercial Act amendment, which has significant adverse effects on corporate management, and call for amendments to the Capital Markets Act to substantially enhance shareholder rights."
Earlier, the Democratic Party of Korea proposed an amendment to the Commercial Act that would expand the fiduciary duties of the board of directors to include shareholders, applying to both listed and unlisted corporations. However, as criticisms that such amendments would hinder corporate management continued, the government announced a plan to amend the Capital Markets Act with 'pinpoint regulations,' narrowing the scope of these duties to listed corporations. Accordingly, Yoon Han-hong, a member of the National Assembly's Political Affairs Committee from the People Power Party, has already proposed an amendment to the Capital Markets Act reflecting this content.
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