Rep. Eunseok Choi Proposes Commercial Act Amendment Including Introduction of "Poison Pill"

Supplementing Corporate Defense Measures
in Response to Ruling Party-led Amendments

Representative Eunseok Choi of the People Power Party proposed a partial amendment to the Commercial Act on the 21st, aiming to protect the legitimate management rights of companies.

There have been ongoing concerns that the current Commercial Act lacks institutional mechanisms for companies to defend their management rights against external threats such as hostile mergers and acquisitions (M&A). In particular, recent moves to amend the Commercial Act have heightened fears that even management stability and decision-making efficiency could be undermined. This has led to calls for urgent legal measures to enhance corporate autonomy and global competitiveness.

Eunseok Choi, the elected member of the People Power Party for Daegu Donggu Gap, is giving an interview to Asia Economy at the National Assembly on the 3rd. Photo by Hyunmin Kim kimhyun81@

The proposed amendment includes the introduction of the poison pill (shareholder rights plan), the allowance of dual-class shares with differentiated voting rights, the introduction of veto shares, and the codification of the "business judgment rule" as its main provisions.

Major countries overseas are also institutionalizing various mechanisms to guarantee long-term corporate strategy and management stability.

The United States broadly permits dual-class shares and poison pill mechanisms. Japan has recently adopted dual-class shares, especially among startups, and operates defensive measures such as shareholder rights plans. France grants tenure voting (multiple voting rights) to long-term shareholders. While it does not have a traditional poison pill, it has legislated and operates similar defensive mechanisms.

Representative Choi stated, "If a company's management rights are threatened, its long-term investment strategies and management vision may be shaken, which could lead to reduced investment and job losses." He added, "We need to revise the Commercial Act system in a more balanced manner to support corporate innovation and sustainability."