DP Lawmakers Discuss "Korean-Style Discovery" to Enhance Shareholder Value... "System Improvements Planned This Year"

Democratic Party Lawmakers Host Meeting
to Promote Activation of Civil Liability Pursuit

Lawmakers from the Democratic Party of Korea, together with experts, have highlighted the limitations of the current shareholder derivative suit system, particularly the difficulty of collecting and proving evidence. They announced plans to push for legislation to introduce a Korean-style "discovery" system within this year.

Participants are taking photos at the "Meeting to Explore Activation of Civil Liability Pursuit for Shareholder Value Damage" held on the 16th at the National Assembly Members' Office Building in Yeouido. Photo by Hwang Seoyul chestnut@

At 10 a.m. on the 16th, the offices of lawmakers Kim Namgeun, Oh Gihyung, and Lee Kangil from the Democratic Party of Korea held a "Meeting to Explore Activation of Civil Liability Pursuit for Shareholder Value Damage" at the National Assembly Members' Office Building in Yeouido. Assemblyman Kim stated, "During the presidential election, I pledged to introduce a Korean-style discovery system," adding, "I believe that a discovery system between shareholders and large corporations will play a role in activating civil liability in practice." He further noted, "This year, we plan to make full-scale improvements to legislation and the system."

Assemblyman Oh explained the significance of the meeting, saying, "This year is being called the year of the market," and emphasized, "Market participants must be able to boldly raise issues and hold directors accountable if there are breaches of their duty of loyalty."

On this day, experts pointed out that limitations in Korea's evidence law create obstacles for shareholder derivative suits. A shareholder derivative suit refers to a lawsuit filed by shareholders on behalf of the company against management when management decisions go against shareholder interests. Attorney Kim Jooyoung from Hannuri Law Firm explained that in shareholder derivative suits, the burden of proof lies with the plaintiff, who is an outsider, while the evidence remains within the company, making it difficult for shareholder plaintiffs to obtain it.

Accordingly, Attorney Kim stressed the need to introduce a discovery system into the Civil Procedure Act and referenced the amendment proposed in a legislative research report commissioned by the Korean Bar Association's Legislative Research Institute. The amendment includes provisions such as: codifying the duty of cooperation and the duty of truthfulness for parties; strengthening the obligation to submit complaints and answers, and expanding the judge's authority to review them; reinforcing procedures for preparing arguments; and introducing an interrogatory system.