Governance Forum "Amendment to Commercial Act, End of the Era of Evasion... Must Be Promulgated Promptly"

Open Letter to Acting Prime Minister Choi Sang-mok
"Opposition Lacks Rationality and Is a Strawman Attack"

The Korea Corporate Governance Forum (hereinafter referred to as the Forum) on the 14th called the passage of the recent Commercial Act amendment "the end of the era of loopholes for controlling shareholders' interests and the first step toward a common-sense capital market for all shareholders," urging Acting Prime Minister and Minister of Strategy and Finance Choi Sang-mok to promptly promulgate it.

In an open letter sent to Acting Prime Minister Choi on the same day, the Forum stated, "We welcome the passage of the Commercial Act amendment, which stipulates directors' fiduciary duties to shareholders and the obligation to protect shareholders' interests?long awaited by 15 million investors."

The Forum expressed regret over the possibility of Acting Prime Minister Choi exercising the right to request a reconsideration, stating, "The Commercial Act amendment is not a political issue but a fundamentally constitutional matter agreed upon by the Supreme Court. If the right to request reconsideration is exercised, the sincerity and trust in the government's value-up policy will be undermined."

Regarding criticisms that the recent Commercial Act amendment will stifle corporate management activities and tighten the market, the Forum drew a clear line. It said, "Some claim that this amendment is a new regulation, but fairly protecting the interests of all shareholders, not just specific ones, in a stock company is actually the foundation and basis for properly implementing a free market economy." The Forum pointed out that opposition to the amendment is "a strawman attack that distorts the bill's contents without any rational basis."

The Forum dismissed claims such as "once the Commercial Act amendment is enforced, companies will not be able to freely conduct research and development (R&D) or mergers and acquisitions (M&A)," calling them "complete falsehoods." It added, "Even if some shareholders oppose, decisions can be made by the board of directors or shareholders' meeting according to the procedures under the Commercial Act, and this does not violate fiduciary duties. Litigation is also not possible."

The Forum urged Acting Prime Minister Choi, saying, "You must have seen and felt firsthand that so-called 'pinpoint regulations' against various market-damaging practices such as low-price issuance, internal trading, unfair mergers, and treasury stock manipulation have all failed or been mere after-the-fact remedies." It emphasized, "Please promptly promulgate the Commercial Act amendment passed by the National Assembly and agreed upon by the Supreme Court."