88% of Listed Companies Say "Amendments to the Commercial Act and Fair Trade Act Are Negative for the Business Environment"

[Asia Economy Reporter Woo Su-yeon] It was found that 88% of domestic listed companies believe that the government's proposed amendments to the Commercial Act and the Fair Trade Act will have a negative impact on the business environment. At the same time, more than 80% of companies demanded revisions to the amendments reflecting the voices from the field.

On the 26th, the Korea Industrial Federation conducted a 'Survey on the Amendments to the Commercial Act and the Fair Trade Act' targeting 213 listed companies across 12 industries. The results showed that 88% of respondents believed that the proposed amendments would negatively affect the business environment. Regarding the Commercial Act amendments, 88% and for the Fair Trade Act amendments, 85% expressed the opinion that revisions were necessary.

Looking at the contents of the bills, domestic companies showed the greatest concern about the proposal for separate appointment of audit committee members in the Commercial Act amendments. Among the responding listed companies, 71.3% answered that the separate appointment proposal needs revision, and 28.7% responded that the introduction of a multiple derivative suit system should be reconsidered.

The recently proposed Commercial Act amendments by the government include the '3% rule,' which limits the voting rights to 3% when appointing audit committee members separately by aggregating the shares of the largest shareholder and related parties. Regarding the separate appointment of audit committee members, 95% of listed companies answered that the content restricting the voting rights of major shareholders should be revised.

When asked about alternatives to this provision, 41.4% answered that audit committee members should be appointed separately but the restriction on major shareholders' voting rights should be abolished, and 19.7% of the total supported appointing all audit committee members as outside directors without restricting major shareholders' voting rights.

Regarding the Fair Trade Act amendments, 85% of the responding listed companies mentioned that revisions were necessary, expressing concerns about the expansion of regulations on internal transactions (38.1%), restrictions on shareholding ratios of holding companies (36.5%), and abolition of exclusive prosecution rights (17.7%).

Jung Man-gi, chairman of the Korea Industrial Federation, expressed concerns about the constitutional issues of the indirect appointment of directors through the separate appointment of audit committee members, stating, "If a separated audit committee member with restricted voting rights participates in board decisions that cause damage to the company, the major shareholder will bear responsibility without authority." He added, "This will deal a fatal blow to global competitiveness due to attacks from foreign hedge funds and checks from competitors."

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