"Second Amendment to Commercial Act to Cut Owner Family Voting Rights in Top 50 Groups by 38%"

An analysis has found that if the second amendment to the Commercial Act passes the National Assembly, the voting rights of owner families in the top 50 business groups for electing audit committee members will decrease by an average of 38%.

On August 19, corporate analysis institute Leaders Index announced that, after analyzing 130 affiliates of the top 50 groups by assets, the average friendly stake held by owner families, affiliates, and public interest foundations amounted to 40.8%.

However, if the already implemented combined 3% rule, as well as the second amendment's cumulative voting system and expansion of separate election for audit committee members, are all applied, 37.8% of these shares will lose their voting rights.

Under the current first amendment to the Commercial Act, when appointing audit committee members, the voting rights of the largest shareholder and related parties are limited to 3% of the total issued shares. If the second amendment-which mandates cumulative voting for listed companies with assets of 2 trillion won or more and increases the number of audit committee members to be elected separately to at least two-is added, the controlling power of owner families could be significantly weakened.

SeAH Group was cited as the most affected case. Although the average friendly stake of four companies, including SeAH Holdings, is 67.8%, 64.8% of this would lose voting rights if the amendment is applied. In particular, SeAH Holdings has a combined stake of 80.7% held by 11 owner family members, affiliates, and public interest foundations, but 77.7% would be unable to exercise voting rights. Korea & Company Group (57.0%) and Lotte Group (55.3%) would also see more than half of their voting rights restricted.

In contrast, the influence of the National Pension Service is expected to expand. The National Pension Service holds more than a 5% stake in 74 listed companies, accounting for 56.9% of the total. Leaders Index explained, "The National Pension Service will secure voting rights equal to those of owner families, making it highly likely to play a casting vote at major shareholders' meetings."

Although the second amendment to the Commercial Act has been delayed due to political standoffs between parties, it is expected to pass the National Assembly soon, led by the Democratic Party.