Key Bills on Livelihood Including the Framework Act on the Promotion of Technology and the Corporate Governance Act Passed in the Plenary Session on the 8th (Comprehensive)

'Gichokbeop' Including Corporate Workout Basis Extended for 3 Years
Strengthening Internal Control Obligations for Financial Companies and More
Passage of Future Car Special Act and Supply Chain Basic Act for Responding to Element Water Crisis and Others

To prevent financial accidents such as incomplete fund sales and large-scale embezzlement that have occurred repeatedly in recent years, a bill to strengthen internal controls of financial companies was passed at the plenary session of the National Assembly on the 8th. In addition, the Corporate Restructuring Promotion Act (기촉법), which supports early detection of signs of corporate insolvency before bankruptcy and rapid normalization through autonomous consultations among creditors, was also passed. As the Legislation and Judiciary Committee of the National Assembly, which had repeatedly stalled due to partisan conflicts, resumed normal operation after about two months, a large number of pending livelihood economy bills were passed at the last plenary session of the 21st regular National Assembly on the 8th.

[Image source=Yonhap News]

On that day, the 'Amendment to the Act on the Governance of Financial Companies,' which strengthens the internal control obligations of financial companies and their executives to prevent financial accidents such as incomplete fund sales and large-scale embezzlement, passed the plenary session of the National Assembly. The amendment to the Financial Company Governance Act includes the establishment of an 'Internal Control Committee' within the board of directors of financial companies to strengthen internal control functions. The amendment newly introduces ▲strengthening the board of directors' monitoring role over internal controls ▲imposing internal control management obligations on executives and CEOs ▲establishing grounds for sanctions and mitigation measures in case of violations of internal control management obligations.

The amendment to the Corporate Restructuring Promotion Act, which supports early detection of signs of corporate insolvency before bankruptcy and rapid normalization through autonomous consultations among creditors, was also passed at the plenary session. The Corporate Restructuring Promotion Act provides the legal basis for corporate 'workouts.' It was enacted as a temporary law in 2001 and has been operated six times through re-enactments since then. However, it lost its effect after the sunset clause expired on October 15 last year. In response, companies facing difficulties due to high interest rates and prolonged low growth urged the National Assembly to pass the Corporate Restructuring Promotion Act, which passed the relevant standing committee, the National Assembly's Political Affairs Committee, on the 28th of last month. The amendment extends the effect of the Corporate Restructuring Promotion Act for three years until 2026. The amendment includes provisions for the workout system, which allows creditors holding more than 75% consent to extend maturity and provide financial support to companies experiencing temporary liquidity crises. Additionally, a supplementary opinion was attached requiring the Financial Services Commission to consult with courts and related agencies by the 31st of this month to review the current status of the corporate restructuring system and, based on this, prepare a developmental reform plan including expanding the role of court approval and authorization, and report it to the relevant standing committee of the National Assembly. The amendment will take effect from the date of promulgation.

The 'Special Act on Promoting the Transformation and Fostering the Ecosystem of the Future Automobile Parts Industry (Future Car Special Act)' was also passed. It includes support measures for future automobile technology development and securing corporate competitiveness through business transformation. The act contains provisions such as ▲establishing a basic plan every five years to revitalize the future automobile parts industry ecosystem ▲training specialized technical personnel ▲providing legal grounds for designating specialized complexes for the future automobile parts industry.

The 'Basic Act on Supporting Supply Chain Security for Economic Security (Supply Chain Basic Act),' aimed at effectively responding to a 'second urea solution crisis,' also passed the National Assembly that day. Following the urea solution crisis in 2021, there were calls for a system to ensure smooth supply chain operation. This bill includes provisions to establish a supply chain stabilization fund and a 'Supply Chain Stabilization Committee' to deliberate and coordinate related matters. It also mandates the establishment of a supply chain stabilization basic plan every three years and the operation and management of an early warning system to preemptively assess supply chain risks. This law will take effect six months after its promulgation.

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