Starting from the 16th, the National Assembly begins discussions on the '3% Rule' Commercial Act... Democratic Party says "Little room for change"

Democratic Party Concludes Business Community Consultations "To Be Addressed in Regular National Assembly"

Yoo Dong-su, Chairman of the Democratic Party's Fair Economy TF, Woo Tae-hee, Executive Vice President of the Korea Chamber of Commerce and Industry, and other participants attending the public discussion on the legislative issues of the Fair Economy 3 Acts held at the National Assembly on the 3rd are taking a commemorative photo before the start of the discussion. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Park Cheol-eung] The National Assembly will begin full-scale discussions on the amendment to the Commercial Act, one of the "Three Economic Laws" (Commercial Act, Fair Trade Act, and Financial Group Integrated Supervision Act), starting from the 16th. The Democratic Party of Korea has completed the process of gathering opinions from the business community but maintains its stance of exploring some alternatives while keeping the basic framework of the government proposal unchanged. The biggest issues, such as the separate election of audit committee members and the so-called "3% rule," are also said to have "little room for change."

Baek Hye-ryun, the ruling party's floor whip on the National Assembly's Legislation and Judiciary Committee and a Democratic Party lawmaker, told Asia Economy in a phone interview on the 4th, "We need to hold a subcommittee meeting to start discussions on the amendment to the Commercial Act, which will likely take place around the 16th or 17th," adding, "No specific Democratic Party proposal has been finalized yet."

Last month, the Democratic Party formed the "Fair Economy Three Laws Task Force (TF)" to listen to the voices of the business community and held a public debate with the Korea Chamber of Commerce and Industry on the 3rd. At this event, Yoo Dong-soo, the Democratic Party’s Policy Committee Senior Deputy Chair and TF Chair, said, "We have heard many opinions. Today’s final debate and listening to opinions are intended to conclude the process." On the same day, Kim Tae-nyeon, the Democratic Party floor leader, stated, "We do not take the concerns of the business community lightly and are also seeking alternatives," adding, "The Democratic Party will ensure the smooth passage of the long-discussed Fair Economy Three Laws during this regular session of the National Assembly."

This marks the beginning of the legislative phase. The Democratic Party has reviewed how well-founded the business community’s concerns are and currently sees no sufficient reason to significantly alter the government proposal. A Democratic Party TF official said, "From the TF perspective, the scope of changes to the bill is not large," adding, "While they talk about shareholder capitalism, major shareholders or owners tend to regard institutional investors and other shareholders as outsiders rather than shareholders."

He continued, "We need to guarantee the rights of all shareholders and make efforts to find better alternatives together. It is problematic to try to exclude others unconditionally." This points to the issue of perspectives embedded in the business community’s concerns.

Regarding the bill’s provision that when electing audit committee members separately, the shares of the largest shareholder and related parties are "aggregated" and only 3% voting rights are granted, the business community argues that this would expose companies to attacks by foreign speculative capital. Compromise proposals have been raised both inside and outside the Democratic Party, such as granting 3% voting rights individually to the largest shareholder and related parties without aggregation, or aggregating but applying a rate higher than 3%, but these seem unlikely at present. There has also been talk of setting a mandatory stock holding period to prevent unfair management intervention by foreign speculative capital, but this too remains uncertain.

The Political Affairs Committee is reportedly planning to hold a public hearing around mid-month on the amendments to the Fair Trade Act and the enactment of the Financial Group Integrated Supervision Act, but the Legislation and Judiciary Committee has no plans for a public hearing on the Commercial Act amendment. Lawmaker Baek said, "We have received opinions from various sources regarding the amendment to the Commercial Act, and since there was extensive discussion during the 20th National Assembly, we judged that there is little need to hold a public hearing."

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