Park Yong-jin "Unqualified Directors to Be Dismissed by Shareholders... Opening the KOSPI 3000 Era" Proposed Amendment to the Commercial Act

[Image source=Yonhap News]

[Asia Economy Reporter Wondara] Park Yong-jin, a member of the Democratic Party of Korea, has introduced a bill to amend the Commercial Act allowing shareholders to dismiss disqualified directors who have been indicted for embezzlement or breach of trust.

On the morning of the 18th, Park held a press conference at the National Assembly to announce the bill, stating, "Through the amendment of the Commercial Act, we aim to make corporate governance transparent and usher in an era of economic growth and KOSPI 3000." He added, "I have submitted the amendment bill as the first bill of the 21st National Assembly under the name 'KOSPI 3000! Park Yong-jin's 3 Laws.'"

According to the proposed amendment to the Commercial Act, shareholders can propose an agenda item at the general shareholders' meeting to dismiss or suspend directors who have been indicted for embezzlement, breach of trust, or involved in accounting fraud. Directors who fail to include such dismissal or suspension agenda items proposed by shareholders in the general meeting's agenda will be subject to a fine of up to 5 million KRW.

The bill also includes provisions for the full introduction of cumulative voting. Previously, companies could opt out of cumulative voting if specified in their articles of incorporation. To strengthen the independence of outside directors, the bill prohibits the largest shareholder and their special related parties from serving as members of the Outside Director Candidate Recommendation Committee. It also includes measures to activate the derivative lawsuit system and gradually mandate electronic voting.

When asked about controversies surrounding the derivative lawsuit system after the briefing, Park responded, "Both companies and government organizations usually have a 'red team,'" dismissing the concerns as "exaggeration." He explained, "We are considering how much to reflect the interests of minority shareholders. The board of directors has only acted as a rubber stamp for management, and we need to strengthen accountability for this. I believe a safety net through diversity in board composition is necessary."

Park has led fair economy legislation by proposing five amendments to the Commercial Act in the 21st National Assembly. He plans to hold a forum on the comprehensive revision of the Fair Trade Act on the 7th of next month and prepare related bills. Park said, "The atmosphere within our party is positive," adding, "The Democratic Party is committed to pushing forward the amendment to the Commercial Act." Regarding whether he has communicated with Kim Jong-in, the emergency committee chairman of the United Future Party, about the amendment, he said, "I have spoken with Chairman Kim. He also expressed willingness to attend related forums if time permits." When asked about his feelings on returning to the Political Affairs Committee in the 21st National Assembly, he said, "I am determined and motivated," adding, "I am glad to be able to focus again on reforming conglomerates. I will support and encourage companies that strive to do well."

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