Eun Sung-soo: "Rapid Implementation of Kian Fund... Will Find Balance Point for Employment Stability Conditions"

Eun Sung-soo, Chairman of the Financial Services Commission

[Asia Economy Reporter Kim Hyo-jin] Eun Sung-soo, Chairman of the Financial Services Commission, said on the 6th, "We will swiftly implement follow-up measures so that the Period Industry Stabilization Fund can be disbursed as soon as possible." Chairman Eun made this remark while presiding over the Financial Risk Response Team meeting, one of the three (finance, industry, employment) response teams under the Central Emergency Economic Countermeasures Headquarters.

The National Assembly passed an amendment to the Korea Development Bank Act (KDB Act), which provides the legal basis for establishing the 40 trillion won Period Industry Stabilization Fund (hereafter referred to as the Fund), at the plenary session on the 29th of last month. The support targets include the air transportation industry, general-purpose machinery manufacturing, electric power industry, automobile engine and automobile manufacturing, ship and boat building, maritime transportation, and telecommunications industries.

Chairman Eun urged, "I ask the banking sector to trust the government's will and participate in protecting period industries through collaboration with the Korea Development Bank." Regarding the 'effort to maintain employment,' one of the conditions for support, Chairman Eun expressed his intention to "find a reasonable balance that achieves the purpose of the fund to stabilize employment while not acting as a constraint on financial support."

The amendment to the KDB Act includes provisions for the Korea Development Bank to establish the fund, with resources raised through bond issuance and borrowings from the government and the Bank of Korea. Support will be provided through methods such as loans, asset purchases, debt guarantees or underwriting, and equity investments (with voting rights limited).

Companies must accept requirements such as employment stability, sharing of benefits from corporate normalization, and prevention of moral hazard.

The amendment includes a premise that workers and management will jointly strive to maintain employment at a certain level.

To share the benefits of normalization, the plan includes allowing equity investments up to 20% of the total support amount. This is based on the principle that the benefits of tax input should not be enjoyed solely by major shareholders and companies. Measures such as company management improvement efforts, restrictions on dividend payments and treasury stock acquisitions, and limits on high salaries have also been established.

On the same day, the Financial Services Commission announced a draft amendment to the Enforcement Decree of the KDB Act, which specifies related regulations for the disbursement of the Fund.

The draft amendment to the Enforcement Decree specifies the government's exercise of voting rights in cases such as ▲resolutions that may significantly affect the value of stocks, including capital reduction and issuance of shares below par value, and ▲cases where a company receiving financial support applies for restructuring procedures and voting rights must be exercised to preserve the Fund's assets.

The seven members of the Fund Management Deliberation Committee will be appointed based on recommendations from the National Assembly's relevant standing committees and related agencies including the Ministry of Strategy and Finance, Ministry of Trade, Industry and Energy, Ministry of Employment and Labor, Financial Services Commission, and Korea Development Bank. The draft amendment will be announced for public comment until the 8th, followed by review by the Office for Government Policy Coordination and approval by the Cabinet before being finalized.

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