Lee Jae-myung: "'3% Rule' Loses Purpose if 'Applied Individually'... Concerns Over Regression in Chaebol Reform"

Gyeonggi Province Governor Lee Jae-myung is responding to questions from lawmakers during the National Assembly's Public Administration and Security Committee's audit of Gyeonggi Province held at the Gyeonggi Provincial Government Office in Paldal-gu, Suwon-si, Gyeonggi-do on the 19th. / Photo by Joint Press Corps

[Asia Economy Reporter Wondara] Lee Jae-myung, Governor of Gyeonggi Province, argued that the government and ruling party should handle the '3% rule' of the 'Fair Economy 3 Laws' as originally proposed, using the combined method. Earlier, the Democratic Party's Fair Economy 3 Laws TF reportedly held a closed meeting and reached a consensus to change the 3% rule from the government's original combined application to individual application.

On the 15th, Lee wrote on his Facebook post titled "Retreat on the Fair Economy 3 Laws, Concerned It May Lead to a Retreat in Chaebol Reform," stating, "Last month, President Moon Jae-in earnestly requested the passage of the Fair Economy 3 Laws in his National Assembly policy speech. However, even though the government submitted the bill to the National Assembly three months ago, proper discussions have not even taken place in the relevant standing committees."

He pointed out, "Regrettably, as controversies over the 3% rule continue, it seems the direction is shifting from the original shareholder 'combined' application to 'individual' application. If the individual application is adopted, major shareholders will be recognized for each 3%, increasing their authority according to the number of related parties, which undermines the original purpose of introducing separate election of audit committee members." He added, "If there are concerns about reverse discrimination against domestic major shareholders compared to foreign investors, the same standards can be applied to foreign investors."

Lee said, "The business community claims that the 3% rule has no overseas precedent, but this is because foreign companies operate stringent audit systems." He criticized, "The current amendment to the Commercial Act initially excluded key corporate governance improvements such as cumulative voting and mandatory electronic voting, and rather, it has raised concerns for falling short of previous proposed bills by relaxing quorum requirements for appointing auditors or audit committee members in companies that have introduced electronic voting."

He emphasized, "This is a rare opportunity. I sincerely hope that discussions on the Fair Economy 3 Laws will no longer be a matter of political party deals or collusion with chaebols, and that the law’s intent to prevent the arbitrary actions of the controlling family and to improve chaebol governance, as well as the public’s desire for reform, will not be undermined."

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