Mid-sized Companies Urge to Stop Commercial Act Amendments That Could Stifle Business Activities Due to Government Reconsideration Request

Mid-sized Businesses Express Regret Over Passage of Amended Commercial Act
Concerns Raised About Negative Impact on Corporate Vitality and National Competitiveness
Call for Immediate Reconsideration and Broader Dialogue for Innovative Growth

The mid-sized business sector expressed regret on the 13th over the passage of the amended Commercial Act in the National Assembly plenary session. This is because the amendment was composed in a way that significantly stifles corporate vitality, such as expanding directors' duty of loyalty, despite clear signs of an economic crisis and continuous concerns from the business community and Commercial Act experts.

On the same day, the Korea Federation of Mid-sized Enterprises criticized in a statement, "Forcibly pushing through the amendment to the Commercial Act unilaterally, ignoring the continuous discussions and constructive proposals from the business community, including measures to enhance corporate value and protect minority shareholders, raises doubts about the National Assembly's willingness to communicate for national development as representatives of the people."

Furthermore, the Federation stated, "In a situation where it is difficult to align shareholder interests due to differing stakes, indiscriminately expanding the scope of directors' duty of loyalty will frequently lead to a situation where active management decisions that promote corporate innovation, such as investment expansion and entry into new businesses, are hard to expect," adding, "The proliferation of lawsuits based on the deteriorated Commercial Act and the expansion of threats to management rights will not only degrade the value of individual companies but also severely damage the competitiveness of the entire industry, ultimately causing a decline in the national economy's standing."

The mid-sized business sector requested that the government halt the amendment to the Commercial Act, which would suppress overall corporate management activities, through an immediate request for reconsideration. The Federation added, "Subsequently, broad participation from various sectors, including the business community centered around the National Assembly, should engage in deliberations to reconsider effective measures for corporate innovative growth and revitalization of the capital market from the ground up."