Economic 8 Organizations: "Relieved by the Veto on the Commercial Act Amendment... Will Continue Constructive Proposals"

Immediate Statement on the Exercise of the Right to Request Reconsideration
"Targeted Measures Are More Effective Than the Commercial Act" Reiterated
"Greater Efforts Toward Management That Respects Shareholder Value"

The business community on the 1st expressed a welcoming stance toward the decision by Acting President and Prime Minister Han Duck-soo to exercise the right to request reconsideration (veto) on the amended Commercial Act.

Park Il-jun, Executive Vice Chairman of the Korea Chamber of Commerce and Industry, Lee Dong-geun, Executive Vice Chairman of the Korea Employers Federation, Kim Chang-beom, Vice Chairman of the Korea Economic Association, and executives from eight economic organizations held a press conference on the 19th of last month at the National Assembly Communication Hall, urging the acting president to exercise the right to request reconsideration of the amended Commercial Act passed by the plenary session. Photo by Yonhap News

On the same day, eight economic organizations including the Korea Economic Association and the Korea Chamber of Commerce and Industry immediately issued a joint statement following Acting President Han's exercise of the right to request reconsideration, stating, "We regard it as fortunate that the right to request reconsideration has been exercised on the amended Commercial Act."

The economic organizations reiterated their concerns about the amended Commercial Act, saying, "While the legislative purpose of enhancing shareholder value is difficult to achieve, there are significant concerns regarding adverse effects on corporate management, such as hindering investment for new industry ventures and threats to management rights from activist funds," and argued that "targeted measures through amendments to the Capital Markets Act, rather than the Commercial Act, are more effective in protecting ordinary shareholders during corporate mergers and divisions."

They added, "As the government is promoting amendments to the Capital Markets Act, the business community will also participate in these discussions and make constructive proposals," and further stated, "We will strive to manage companies with respect for shareholder value and actively pursue innovation and investment to overcome economic crises such as low growth and trade issues."

Earlier, Acting President Han presided over a regular Cabinet meeting at the Government Seoul Office in the morning and announced, "After much deliberation, I intend to request reconsideration from the National Assembly regarding the amended Commercial Act." He said about the amended Commercial Act, "Considering that it could significantly affect the management environment and competitiveness of most companies, including large and small businesses, it is necessary to find alternatives through more in-depth discussions to minimize side effects."

The amended Commercial Act, which was proposed as a party policy by the Democratic Party and passed the National Assembly plenary session on the 13th of last month led by the opposition, mainly expands the duty of loyalty of directors to include not only the 'company' but also the 'shareholders.' The business community has consistently expressed concerns about the amended Commercial Act. On the 19th of last month, eight economic organizations held a joint press conference at the National Assembly Communication Office, detailing the problems of the amended Commercial Act and requesting the exercise of the right to request reconsideration once the amendment is sent to the government.