Ruling Party to Address Yellow Envelope Act and Commercial Act Amendments Starting Today
Discussion on Revising Criminal Law for Breach of Trust and Strengthening Civil Liability
Kim: "A Reform That Holds Wrongdoers Accountable and Protects the Vulnerable"
Kim Byungki, floor leader of the Democratic Party of Korea, announced on the 21st that the party would actively promote the rationalization of economic criminal penalties, including the crime of breach of trust. To this end, the Democratic Party has decided to swiftly establish a task force (TF) on the rationalization of civil liability for economic crimes. This move is interpreted as a kind of "carrot" to dispel concerns in the business community about the expansion of management uncertainty and the impact on the stock market stemming from the Yellow Envelope Act (the amendment to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act) and the Commercial Act amendment.
At the Democratic Party's Policy Coordination Meeting held at the National Assembly that morning, Floor Leader Kim stated, "We will actively pursue the rationalization of economic criminal penalties, including the crime of breach of trust," and promised to strengthen civil liability for illegal acts while easing criminal liability.
He explained that while major advanced countries address illegal acts arising from management activities through civil compensation and fines, South Korea imposes excessive criminal penalties such as the crime of breach of trust, and that the system should be changed to meet global standards.
Once the task force on the rationalization of civil liability for economic crimes is launched, it will review criminal law provisions on offenses such as breach of trust, abuse of authority, obstruction of business, and dissemination of false information. The task force will also discuss the introduction of systems to strengthen civil liability, such as punitive damages, class actions, and a Korean-style discovery (evidence disclosure) system.
Floor Leader Kim pointed out, "Major advanced countries deal with illegal acts arising from management activities through civil compensation and fines, and our Constitution also strictly limits criminal liability, but the reality is different. During the era of military dictatorship and authoritarian regimes, criminal penalty provisions were routinely included whenever laws were enacted."
He continued, "There are significant concerns that strengthening directors' civil liability to shareholders in this Commercial Act amendment could lead to criminal punishment for breach of trust. It is true that foreign companies also feel burdened when investing in Korea. Now, we must rationally reform economic criminal penalties."
As domestic and foreign businesses and the business community have intensified their opposition to the Yellow Envelope Act and the second amendment to the Commercial Act, both of which are scheduled to be addressed at the August extraordinary session of the National Assembly from today until the 25th, and as concerns have grown over negative impacts on domestic investment and the stock market, momentum has quickly built for alternative measures.
Previously, Democratic Party lawmaker Kim Taenyon proposed amendments to the Commercial Act and Criminal Act last month to abolish the special breach of trust provision in the Commercial Act and to codify the "business judgment rule" in the Criminal Act. However, as the party's internal consensus on handling controversial bills strengthened, discussions effectively stalled. Recently, however, as internal and external sentiment has shifted, efforts to supplement the legislation to address business community concerns have gained traction.
Earlier, the Korea Employers Federation and five other major business organizations, as well as the American Chamber of Commerce in Korea (AMCHAM), visited the National Assembly to request a postponement and reconsideration of the passage of key economic bills. The legal community has also continued to call for civil solutions.
Floor Leader Kim stated, "Rationalizing economic criminal penalties is a reform that strictly holds wrongdoers accountable while protecting the vulnerable. The Democratic Party will fulfill its promise to the people to create a country that is business-friendly and grows with justice."
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