Democrats on South Korea Acting President's Veto of Commercial Act Amendment Bill: "We Won't Give Up, Will Definitely Complete It"

"We Will Respond to Surprise Paid-in Capital Increases in the National Assembly's Political Affairs Committee"
Possibility of Reintroduction if Rejected in National Assembly Re-vote

The Democratic Party of Korea emphasized on the 1st that Acting President Han Deok-soo's exercise of the right to request reconsideration (veto) on the amendment to the Commercial Act will be met with an all-out effort until the bill passes. They plan to discuss immediate countermeasures centered on the National Assembly's Political Affairs Committee in response to companies' surprise paid-in capital increases.

Jin Seong-jun, the Policy Committee Chair of the Democratic Party, said at the party floor strategy meeting held at the tent headquarters in Gwanghwamun, Seoul, that morning, "The Democratic Party will not give up on the amendment to the Commercial Act under any circumstances and will definitely complete it."

Earlier, Acting President Han presided over the Cabinet meeting at the Government Seoul Office and exercised the right to request reconsideration on the amendment to the Commercial Act, which was transferred to the government on the 21st of last month. Han said, "I deeply sympathize with the basic intent of the (Commercial Act amendment) bill," but added, "In a situation where it can significantly affect the management environment and competitiveness of not only large corporations but also the majority of small and medium-sized enterprises, it is necessary to find alternatives that minimize side effects through more in-depth discussions."

Policy Committee Chair Jin emphasized, "The amendment to the Commercial Act aims to protect the rights of minority shareholders and make the governance structure of our companies transparent and fair," adding, "Through this, we want to transform the Korea discount into a Korea premium." He raised his voice toward Acting President Han, saying, "Right after returning to duty, instead of correcting the market economy, you made a choice that only causes confusion."

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Lee Jung-moon, Senior Deputy Chair of the Policy Committee, also pointed out, "Even after returning, Acting President Han is still obsessed with opposition for the sake of opposition and seems to intend to act as a vetoing acting president beyond his authority," adding, "While the government and the People Power Party are delaying the amendment to the Commercial Act by obstructing, companies are consecutively conducting paid-in capital increases." He noted, "The amendment to the Commercial Act and the amendment to the Capital Market Act are not mutually exclusive," and said, "Only when both bills are amended together and each fulfills its role can the fundamental problems facing South Korea be solved." He added, "We will also respond immediately to companies' surprise paid-in capital increases at the level of the National Assembly's Political Affairs Committee."

Earlier, the amendment to the Commercial Act, which passed the plenary session of the National Assembly last month led by the opposition parties including the Democratic Party, included expanding the duty of directors from the existing ‘company’ to ‘company and shareholders’ and mandating the introduction of electronic shareholder meetings for listed companies. In response, the government and the ruling People Power Party have opposed the amendment, arguing that it will intensify attacks by speculative capital and activist funds on domestic companies. The ruling party has proposed an alternative amendment to the Capital Market Act that protects the rights of minority shareholders limited to about 2,600 corporations listed on the domestic stock market instead of the amendment to the Commercial Act. The business community also expresses concern that the term ‘shareholders’ specified in the amendment to the Commercial Act is broad, ranging from minority shareholders to major shareholders, which could lead to conflicts of interest among shareholders.

With Acting President Han's veto exercise on this day, the amendment to the Commercial Act will return to the National Assembly for a re-vote. For the bill to pass in the re-vote, a majority of the total members must be present, and at least two-thirds of the members present must approve. If the requirements are not met, the bill will be discarded. The Democratic Party is also considering reintroducing the bill led by the opposition if the amendment to the Commercial Act is rejected in the National Assembly re-vote. In this case, it is likely to address not only the expansion of the directors' duty of loyalty to shareholders but also the expansion of separate election of audit committee members in large listed companies and the mandatory cumulative voting system for large listed companies.