Democratic Party to Reintroduce Commercial Act Amendment with Immediate Enforcement

Changed to Immediate Enforcement upon Promulgation
TF Says, "Additional Review of 3% Rule Amendment"

The Democratic Party of Korea's Task Force for Revitalizing the Korean Stock Market announced on June 5 that it would once again push for an amendment to the Commercial Act. The party also plans to pursue measures such as making the effective date of the law the same as its promulgation date, and lowering the threshold for exercising the right to propose an agenda to 1%.

At a press conference held at the National Assembly on this day, the task force stated, "We are moving forward with the amendment to the Commercial Act." They explained, "Although the amendment passed the National Assembly's plenary session on March 13, it was vetoed by Han Ducksoo, who was acting president during the Yoon Suk-yeol administration, and was subsequently put to a re-vote at the National Assembly on April 17, where it was rejected. Reflecting the will of the people confirmed in the presidential election, we are reintroducing the amendment to the Commercial Act."

The basic framework of the amendment will maintain the structure of the Commercial Act amendment that was proposed as the Democratic Party's official policy in November of last year. The bill includes provisions such as codifying directors' duty of loyalty to shareholders, introducing cumulative voting in the election of directors for large listed companies, increasing the number of directors who serve as audit committee members and are elected separately, and introducing electronic general meetings of shareholders. However, there is a difference in the timing of promulgation. While the previous amendment stipulated that the law would take effect one year after promulgation, the current proposal?except for the section on electronic general meetings?stipulates immediate enforcement.

In addition, the task force expressed its intention to pursue an amendment to the 3% rule. In addition to the existing party platform, the issue of revising the 3% rule will be included. There have been cases where major shareholders have transferred part of their shares to related parties to circumvent voting rights restrictions on holdings exceeding 3%. The new amendment will include provisions to prevent such practices. An amendment to the Capital Markets Act will also be pursued alongside the Commercial Act. Oh Ki-hyung, a Democratic Party lawmaker who heads the task force, explained, "The amendment to the Capital Markets Act will also be pursued together."

Although there are schedules such as the Democratic Party's floor leader election, the party plans to move quickly. Since the new floor leadership will be formed on June 13, it appears that the timing for handling the legislation will be coordinated afterward. Oh stated, "We need to process this as quickly as possible."

Previously, President Lee Jaemyung, during his presidential campaign, said regarding the amendment to the Commercial Act, "It will be handled within two to three weeks after inauguration," and added, "Since it already passed the National Assembly once, we need to strengthen and supplement it further." Regarding the legislative outlook, he stated, "As long as the president does not exercise the veto, it will not take even a month after inauguration to process it."