Establishment Basis for 40 Trillion Won Industrial Stability Fund... Conditions for Employment Retention and Profit Sharing

[Asia Economy Reporter Kim Hyo-jin] The legal basis for establishing a 40 trillion won 'Period Industry Stabilization Fund' to support key industries struggling due to the novel coronavirus infection (COVID-19) has been secured. Companies seeking support must accept conditions such as maintaining employment and sharing the benefits of normalization.

According to financial authorities on the 30th, the National Assembly held a plenary session the day before and passed an amendment to the Korea Development Bank Act (KDB Act) that enables the establishment of the Period Industry Stabilization Fund.

On the 22nd, the government decided at the 5th Emergency Economic Meeting chaired by President Moon Jae-in to create a 40 trillion won Period Industry Stabilization Fund to support seven key industries: aviation, shipping, automobile, shipbuilding, machinery, electricity, and telecommunications.

The amendment includes provisions to establish the fund within KDB and to raise resources through bond issuance and borrowings from the government and the Bank of Korea. The fund's operation period is until December 31, 2025.

The support targets include defense industry companies, sectors restricted from foreign investment, emergency resource production industries, sectors possessing national core technologies, and essential public utility businesses. The purpose is to support industries that have a significant impact on the national economy, employment stability, and national security. More specific details will be determined by presidential decree next month.

The conditions for support are ▲ joint efforts by workers and management to maintain employment at a certain level ▲ inclusion of equity investment (including convertible bonds and bonds with warrants) within 20% of the total support amount ▲ companies must make efforts to improve management and comply with profit distribution, treasury stock acquisition, and high salary restrictions.

Earlier, the Political Affairs Committee amended the original bill to principally restrict voting rights on shares acquired by KDB in relation to equity investment. This was due to concerns over corporate management intervention through the Period Industry Stabilization Fund.

The amendment will take effect immediately upon promulgation (within next month). The Financial Services Commission stated, "We will promptly complete follow-up measures such as revising enforcement ordinances and preparing detailed support criteria to ensure swift financial support."

This content was produced with the assistance of AI translation services.