Ministry of Justice to Vigorously Promote Amendments to Commercial Act Including Derivative Suits and Separate Appointment of Audit Committee Members

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[Asia Economy Reporter Kim Hyung-min] The Ministry of Justice has initiated the revision of the Commercial Act to strengthen the rights of minority shareholders and improve corporate governance.

On the 10th, the Ministry of Justice announced that it will prepare a draft amendment to the Commercial Act, focusing on the introduction of derivative lawsuits, separate appointment of audit committee members, easing the resolution requirements for appointing auditors at shareholders' meetings, and improving the regulations on the dividend record date, and will publicly notify the draft on the 11th.

The amendment includes the introduction of a derivative lawsuit system that allows parent company shareholders to hold legally accountable subsidiary directors who neglect their duties and cause damage to the company.

Derivative lawsuits have long been discussed as a means to prevent illegal self-serving acts by major shareholders, such as preferential transactions, and to secure minority shareholders' rights to supervise management.

There is also a plan to elect at least one audit committee member separately from directors at the shareholders' meeting.

This is to ensure that audit committee members independently monitor management activities, free from the influence of major shareholders.

The current Commercial Act stipulates that directors are appointed first, followed by the election of audit committee members from among the directors.

The amendment also revises the voting rights restriction regulations. When appointing or dismissing audit committee members of listed companies, the maximum shareholder's voting rights, including those of special related parties, and general shareholders' voting rights will be uniformly restricted for shares exceeding 3%.

When appointing auditors using electronic voting at shareholders' meetings, the requirement is expected to be eased to a majority of the voting rights of attending shareholders.

Currently, a resolution requires a majority of the voting rights of attending shareholders plus at least one-quarter of the issued shares.

The Ministry of Justice plans to improve regulations related to the dividend record date to resolve the side effect of shareholders' meetings being concentrated at the end of March. It also revised regulations related to the exercise of minority shareholders' rights to eliminate interpretive controversies.

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