3% Rule Single-Handled by Legislation and Judiciary Committee Agenda Coordination Committee... "Eased Compared to Government's Original Proposal"

Joo Ho-young, floor leader of the People Power Party, is blocking Yoon Ho-jung, chairman of the Legislation and Judiciary Committee, from passing the amendment to the Corruption Investigation Office Act during the full committee meeting held at the National Assembly on the 8th. Photo by Yoon Dong-ju doso7@

[Asia Economy reporters Lee Ji-eun and Jeon Jin-young] The National Assembly's Legislation and Judiciary Committee held a coordination meeting and unilaterally passed the amendment to the Commercial Act, which includes the so-called '3% rule.' Although it is explained that the amendment was relaxed compared to the original government proposal considering small and medium-sized enterprises, the business community has expressed concerns, raising the possibility of infringement on management rights.

Baek Hye-ryun, the Democratic Party's Legislation and Judiciary Committee spokesperson, said in a press briefing after the coordination meeting on the afternoon of the 8th, "Since the Commercial Act applies to all companies, we considered mitigating the impact," explaining the decision.

Previously, the government proposed a plan to limit the voting rights of the largest shareholder and related parties combined to 3% when electing audit committee members. However, the ruling party partially relaxed this in response to criticism from the business community and opposition parties that it could trigger management disputes. For inside directors serving as auditors, the combined limit is 3%, while for outside directors serving as auditors, each is recognized as 3%. Additionally, for derivative lawsuits, the plaintiff qualification for unlisted companies remains at 1% (one-hundredth) of total shares, while for listed companies, it was decided to raise the threshold from 0.01% (one ten-thousandth) to 0.5% (fifty ten-thousandths).

Baek said, "The business sector opposed everything, including the 3% rule and derivative lawsuits," adding, "This conclusion was reached after considering various factors, and the resolution was made to minimize harm not only to large conglomerates but also to medium-sized companies."

He added, "Large corporations are rather better equipped to respond to the (Commercial Act amendment), but medium-sized and small enterprises may not be able to cope as well," noting that these considerations led to a relaxation compared to the government proposal. Although this was the approach taken at the coordination meeting, there may be differing opinions on the Commercial Act in the plenary session," leaving room for further amendments.

However, the economic sector expressed concerns over the ruling party's unilateral handling of the bill. On the same day, six organizations, including the Korea Employers Federation, issued a joint statement in the name of their heads, raising their voices, saying, "However, the bill, which hardly reflects the core demands of the business community, is being pushed through almost solely by the ruling party and in a surprise manner, causing deep concern and bewilderment within the economic sector."

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