Sangjang Association "Regret over Passage of Commercial Act Amendment... Request to Exercise Veto"

The Korea Listed Companies Association expressed "deep concern and regret" on the 13th regarding the passage of the amended Commercial Act by the National Assembly.

On the 13th, the partial amendment to the Commercial Act was passed at the plenary session of the National Assembly. The amendment expands the duty of directors from the existing "company" to "company and shareholders" and includes provisions mandating the introduction of electronic general meetings of shareholders for listed companies. March 13, 2025 Photo by Kim Hyun-min

In a statement issued that day, the Association said, "The business community has repeatedly pointed out the problems of the amended Commercial Act and requested revisions," adding, "We cannot help but feel devastated that the opinions of companies were not sufficiently reflected as the bill was passed."

The core of the amended Commercial Act passed by the plenary session is the expansion of the duty of loyalty of directors (Article 382-3 of the Commercial Act) from the existing 'company' to 'company and shareholders.'

The Association pointed out, "This amendment to the Commercial Act includes elements that will seriously cause uncertainty in corporate management rights and contraction of business activities," and added, "In the global economic environment where uncertainty is increasing due to the worldwide expansion of protectionism, it is clear that this will lead to the loss of future growth engines for our companies."

It further explained that the passage of this amended Commercial Act will cause greater harm to small and medium-sized enterprises (SMEs) and mid-sized companies. The Association stated, "From the perspective of SMEs and mid-sized companies, which make up the majority of Korean companies, there is concern about a paradoxical situation where excessive regulation infringes on management autonomy, reducing them to fragile small businesses," and argued, "This bill is the result of political opportunism that did not sufficiently consider the characteristics and realities of our industry and capital market."

It then emphasized, "The business community strongly urges the Acting President to exercise the veto power over the amended Commercial Act so that the opinions of companies can be thoroughly reviewed and reflected."