Regret Over Passage of Three Economic Laws... Cold Water on Overcoming Economic Crisis

Korea Listed Companies Association Criticism Statement Released
"Dangerous Idea That Fails to Distinguish Anti-Conglomerate Awareness and Anti-Business Sentiment"

On the 9th, the amendment to the Commercial Act was passed in the plenary session of the National Assembly.
[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] The Korea Listed Companies Association expressed deep regret over the passage of the 'Economic 3 Laws'?amendments to the Commercial Act, the Fair Trade Act, and the Financial Group Supervision Act?at the National Assembly plenary session. They criticized that the laws rather pour cold water on overcoming the economic crisis.

On the 10th, the Listed Companies Association issued a statement saying, "The Economic 3 Laws contain provisions that severely restrict corporate management activities and ignore the realities of businesses. Despite persistent requests for amendments through numerous proposals and public hearings, including at the plenary session, most of our requests were not reflected." They added, "We urge additional legislative amendments to establish supplementary measures to minimize side effects before the amendments take effect, and earnestly request the government and the National Assembly to prioritize policies that consider our companies rather than policies that stifle businesses and pour cold water on overcoming the economic crisis."

In particular, they expressed deep regret over the amendment to the Commercial Act, which includes the '3% rule' limiting the voting rights of major shareholders to 3% when electing audit committee members. The Listed Companies Association pointed out, "The decision-making of joint-stock companies is most democratic when it follows the direction decided by the majority of shares based on the principle of one share, one vote. Nevertheless, this amendment limits the voting rights of major shareholders to 3%, regardless of how many shares they hold, allowing foreign speculative capital to exert stronger influence with far fewer shares than major shareholders."

The legislative intent of the Commercial Act amendment to protect minority shareholders has been criticized for transforming into a law that hedge funds exploit. With selective application of minority shareholder rights, foreign funds or competitors holding only 1-3% of a company's shares can, even in just one day, demand shareholder proposals, multiple derivative lawsuits, dismissal requests for directors and auditors, and requests to inspect accounting books.

The Listed Companies Association stated, "This amendment will lead to an irrational outcome where listed companies must expend resources defending against speculative capital instead of contributing to national economic development and job creation." They criticized, "It is a very dangerous idea that fails to distinguish between anti-chaebol sentiment and anti-business sentiment and tries to solve chaebol reform by stifling businesses."

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