[Exclusive] Ministry of Justice Previously Stated "Veto on Commercial Act Amendment Not Allowed"... Controversy Over Changed Position

Position Delivered Last Year: Difficult for President to Exercise Veto Power
Acting President Also Interpreted as Lacking Authority
No Explanation Provided for Change in Ministry of Justice's Opinion

Yonhap News

The Ministry of Justice was confirmed to have expressed the opinion that it "did not have the authority" to exercise the president's right to request reconsideration (veto power) on the amendment to the Commercial Act before the '12·3 Emergency Martial Law.' As the competent ministry, it comprehensively reviewed the matter and conveyed that it was undesirable, and this conclusion can also be interpreted as Prime Minister Han Duck-soo, acting as the president, not having the authority to exercise the veto power. If the Ministry of Justice, which had this stance, recommended the exercise of the veto power to Acting President Han, it would mean reversing its initial opinion, and controversy is expected over the grounds for the changed judgment. Additionally, it was confirmed that the Ministry of Justice cited political judgments related to approval ratings beyond its usual scope of legal review and judgment, raising concerns about appropriateness.

On the 1st, a senior government official said, "During Minister Park Seong-jae's tenure, the Ministry of Justice conveyed the opinion that it would be difficult for President Yoon Seok-yeol to exercise the veto power if the amendment to the Commercial Act passed," adding, "They submitted this opinion to the presidential office, citing weak legal grounds for exercising the veto and significant political burdens."

The official elaborated, "During Minister Park's tenure, the Ministry of Justice's position was that the president should not be burdened with (exercising) the veto power, and because of this, the government decided to expedite the Capital Market Act."

According to multiple government officials, the Ministry of Justice judged that it would be difficult to exercise the veto power from both legal and political perspectives. The president can exercise veto power if a bill violates the constitution or related laws (constitutional violation) or if there is a concern that it infringes on the rights or interests of the people (damage to national interests). In the case of the amendment to the Commercial Act, it is difficult to see it as falling under these cases.

Politically, it was also viewed negatively. A government official said, "If President Yoon had unilaterally exercised the veto power on the amendment to the Commercial Act, he could not have ignored the backlash from minority shareholders and the resulting impact on approval ratings," adding, "The Ministry of Justice also agreed that the political burden was too great."

The amendment to the Commercial Act began when President Yoon visited the Korea Exchange early last year and said, "We will push for legal amendments so that the board of directors responsibly reflects the interests of minority shareholders." Lee Bok-hyun, the Financial Supervisory Service chief, known as President Yoon's close aide, also made it a key issue during an investor relations (IR) event in New York in May last year by stating, " I believe the duty of loyalty of directors to shareholder interests under the Commercial Act must be introduced unconditionally."

However, after the general election defeat and increasing opposition from the business community, the policy momentum for the amendment to the Commercial Act was lost, and the government eventually shifted direction to amend the Capital Market Act. Later, the ruling Democratic Party suddenly passed the amendment to the Commercial Act in the National Assembly plenary session earlier this year, drawing political attention again.

The ruling People Power Party requested Acting President Han to exercise the veto power regarding the amendment to the Commercial Act, and the Ministry of Justice, as the competent ministry, is also known to have recommended exercising the veto. Acting President Han is expected to exercise the veto power on the amendment to the Commercial Act at the regular Cabinet meeting scheduled for that morning.

If it is confirmed that the Ministry of Justice recommended exercising the veto power, it is expected to be difficult to avoid criticism that it changed its stance based on political judgment. This is because the legal and political judgments had already been concluded.

Park Ji-won, a member of the Democratic Party, said, "Although some companies oppose the amendment to the Commercial Act, the Financial Supervisory Service supports it, so it is not right for Acting President Han to exercise the veto power," adding, "We need to investigate why the Ministry of Justice changed its position."

A Ministry of Justice official explained, "Before President Yoon declared emergency martial law, discussions were held with the F4 regarding the amendment to the Commercial Act, and various possible scenarios were reviewed," adding, "We cannot confirm whether the official opinion at the time was that it was right not to exercise the veto power."