Concerns Over Amendments to Commercial Act and Fair Trade Act in the National Assembly

Ruling and Opposition Parties' Policy Debate at the 'Jeonhwan-gi Korean Economy Forum'

Members of the Future United Party, Choo Kyung-ho, and the Democratic Party, Kim Min-seok, are attending the Korea Economic Forum inaugural discussion held at the National Assembly on the 16th of last month. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Kiho Sung] Recently, concerns have arisen in academia, the business community, and now even in the National Assembly that the proposed amendments to the Commercial Act and the Fair Trade Act, announced for public comment by the Ministry of Justice and the Fair Trade Commission, could threaten corporate management rights. The National Assembly pointed out that if the Commercial Act and Fair Trade Act are amended as proposed, corporate management rights could be left defenseless, emphasizing the need for mechanisms such as dual-class voting rights or poison pills, which are recognized as management defense measures abroad. The Ministry of Justice and the Fair Trade Commission plan to prepare the final government legislative proposal based on feedback from various sectors and submit it to the National Assembly as early as September.

On the 23rd, discussions on this topic took place at the "Let’s Make Companies Thrive!" policy forum held in Seminar Room 9 of the National Assembly Members’ Office Building in Yeouido, Seoul. The forum, organized by the "Korean Economy Transition Forum," is a group formed by 15 economic lawmakers from both ruling and opposition parties, with Representative Choo Kyung-ho of the United Future Party serving as the lead member. Notably, the forum includes Democratic Party lawmakers such as Kim Min-seok, former head of the Democratic Research Institute, the ruling party’s think tank, and Kim Kyung-man, former head of the Economic Policy Division at the Korea Federation of SMEs. However, these two lawmakers did not attend the forum due to a morning field inspection related to "tap water larvae."

Representative Choo, the forum’s lead member, emphasized, "Many economic experts stress that what our economy needs is not anti-business laws and regulations that strangle companies, but rather proactive and efficient management support measures and next-generation technological innovation in preparation for the Fourth Industrial Revolution era." He warned, "Especially as global competition intensifies, our companies stand on the brink of life and death, and political or ideological logic must never override economic principles." He also stated, "Currently, the Korean economy is experiencing heightened crisis sentiment due to rapid changes in domestic and external environments and increasing uncertainty about the future. In this context, social discussion and consensus on how to amend the two pillars of corporate-related laws?the Commercial Act and the Fair Trade Act?are very important issues for the transitioning Korean economy."

Choi Joon-sun, Honorary Professor at Sungkyunkwan University School of Law, pointed out, "Domestic companies have no means to defend their management rights," warning that "the Ministry of Justice’s proposed amendment to the Commercial Act strengthens protection not for small shareholders but for malicious foreign speculative capital, resulting in companies being defenseless against threats to their management rights." Regarding the codification of selective application of derivative lawsuits and small shareholder requirements, he said, "This is a device that inevitably makes companies vulnerable to attacks by speculative capital through short-term acquisitions," and stressed, "There must be a balance between offensive and defensive measures regarding management rights."

Professor Jeon Sam-hyun of Soongsil University’s Department of Law, in his presentation titled "Problems and Alternatives of the Comprehensive Amendment to the Fair Trade Act," criticized, "This revision plan is merely a stereotypical legal amendment aimed at chaebol reform, which has been discussed for over 20 years," and pointed out, "The current proposed legislation lacks institutional improvements that consider the drastically changed management environment, such as the Fourth Industrial Revolution and intensified global competition."

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