[Reporter’s Notebook] National Champion Companies Threaten to Remove the Taegeuk Mark

Companies Seek Opportunities Abroad Amid Second Amendment to the Commercial Act
Firms Reluctant to Repatriate Overseas Capital
Even "National Representative" Corporations Follow Suit
Supplementary Legislation Needed to Safeguard Corporate Management

While covering the business community's response to two rounds of amendments to the Commercial Act, there is a sentiment I frequently encounter: there is no longer any compelling reason to bring money earned overseas back to Korea. With the expansion of shareholder rights and the easing of requirements for board membership, there is a growing possibility of external forces becoming involved in management. As a result, companies are increasingly viewing domestic capital operations as a burden. This is seen as evidence of the significant pressure that changes to the Commercial Act place on corporate decision-making.

Consequently, companies have shifted their strategy to spending and investing the money earned abroad in overseas markets, focusing on local expansion. Companies that possess core technologies and have been active in overseas markets are prioritizing the construction of factories and the expansion of investments abroad rather than domestically. If the main stage for management of leading companies?those that have elevated the national brand and supported the Korean economy?effectively moves overseas, it becomes difficult to continue calling them "national representatives."

This trend is expected to intensify and become even more apparent, which is a growing concern. Lee Woongjae, Senior Research Fellow at the Korea Industry Alliance Forum, stated, "Many countries are now implementing incentives to attract our companies, such as the United States with its reshoring policies to revive manufacturing, or Ireland with its significant corporate tax cuts." He added, "There is a high likelihood that many companies will determine that spending and investing overseas capital abroad is more advantageous for their business."

Feedback from the field indicates that this is not simply a matter of money; rather, the distrust and fatigue caused by institutional changes are influencing corporate decisions. During the legislative process for regulatory laws often labeled as "anti-business laws," such as the amendments to the Commercial Act or the so-called Yellow Envelope Law (amendments to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act), the sense of pressure felt by companies has become even more pronounced. Lee Hosun, a law professor at Kookmin University, commented, "The amendments to the Commercial Act are pushing corporate management into the realm of criminality," while Kim Hyun, former president of the Korean Bar Association, pointed out, "Sound industrial capital could face reverse discrimination." Although the stated intent of these measures is to protect minority shareholders, companies are perceiving them as management risks.

While the amendments to the Commercial Act emphasize strengthening the rights of minority shareholders, they have also imposed additional burdens on companies. The obligation to disclose management information and the increased volatility of boards of directors are discouraging capital operations and fundamentally altering the flow of money. Companies are attempting to reduce risk by keeping and reinvesting funds locally rather than repatriating them. As a result, factories and jobs created by that capital are also moving abroad, and there is a high risk that research and development hubs and decision-making structures will be reorganized around overseas operations. The outflow of capital is tantamount to the loss of the industrial base. What is urgently needed is supplementary legislation. Improvements to breach of trust laws and the codification of the business judgment rule are not merely about protecting management rights; they are mechanisms for safeguarding domestic industry, the economy, and jobs. Only when conditions are established that allow money to be spent safely within Korea will factories remain, technology accumulate, and industrial competitiveness be maintained. Even with technologies and talent that others covet, domestic companies must not be reduced to empty shells or lose the significance of the Taegeuk mark due to unprotected regulatory measures.