Reviewing the First Legislative Bill Submitted by the Financial Services Commission to the 22nd National Assembly

Most aimed at improving punishment regulations
Legislation related to corporate value-up also submitted

The Financial Services Commission (FSC) has submitted a total of five legislative bills to the Political Affairs Committee after the opening of the 22nd National Assembly. Considering the current situation of a minority government in the National Assembly, it is analyzed that the amendments were prepared on topics with minimal controversy.

According to the National Assembly Legislative Information System on the 29th, the FSC has five bills either pending or under legislative notice since the opening of the National Assembly. These include three partial amendments to the Act on Capital Markets and Financial Investment Business, one partial amendment to the Special Act on Financial Innovation Support, and one amendment to the Certified Public Accountant Act, the Savings Banks Act, and the Credit Cooperatives Act.

Most of these aim to improve penal provisions to alleviate difficulties in private economic activities caused by excessive penalties. Representative examples include one amendment to the Capital Markets Act and amendments to the Certified Public Accountant Act, Savings Banks Act, and Credit Cooperatives Act. These tasks were derived through an economic penal provisions task force involving the Ministry of Economy and Finance, Ministry of Justice, and the Office for Government Policy Coordination. In 2022, the government prepared improvements to replace penalties such as fines or imprisonment for minor legal violations related to economic activities with administrative sanctions like fines. This is to reduce punishments for minor violations such as document preparation or retention obligations, simple reporting duty violations, and refusal of simple administrative investigations.

Kim Byung-hwan, nominee for the Financial Services Commission chairman, is responding to questions from lawmakers at the confirmation hearing held by the National Assembly's Political Affairs Committee on the 22nd. Photo by Kim Hyun-min kimhyun81@

Looking at the amendments submitted by the FSC, the amendment to the Certified Public Accountant Act requires revision to impose lighter penalties when related books are not prepared or kept at the office; the Savings Banks Act when borrowing exceeds own capital; and the Credit Cooperatives Act when refusing to comply with FSC management or refusing to submit materials. The Capital Markets Act previously stipulated imprisonment of up to one year or a fine of up to 30 million won for refusing a legitimate request to inspect books or documents from investors or beneficiaries without just cause. The amendment proposes to first issue a corrective order and impose penalties only if the correction is not made thereafter. In particular, the Savings Banks Act and Credit Cooperatives Act appear to have become obsolete, as no fines have been imposed in the past five years. However, since these provisions require FSC recommendations, the regulations remain to ensure compliance with these matters.

Additionally, there is an amendment to the Capital Markets Act aimed at supporting the growth of venture companies and facilitating the supply of venture capital by establishing a corporate growth collective investment vehicle. If this bill passes, collective investment assets exceeding 40% of the total assets of the collective investment vehicle can be invested in venture companies with high growth potential. A bill to enhance corporate value (value-up) has also been prepared. It aims to strengthen investor protection through disclosure of financial information of listed companies by imposing obligations such as submitting semi-annual and quarterly reports immediately before listing for corporations required to submit a business report for the first time due to listing. The deadline for submitting major event reports may also be set by presidential decree to ensure that key information is provided to investors in a timely manner. An amendment has also been submitted to establish the basis for commendations and monetary rewards for those who actively perform tasks related to innovative financial services development and promotion. It appears that the plan is to reward two people per year with 1 million won each.

Meanwhile, five amendments were also submitted 45 days after the opening of the 21st National Assembly. These include the Governance Act to strengthen the role of the Executive Candidate Recommendation Committee, the Insurance Business Act to enhance insurance company competitiveness, the Capital Markets Act to improve the online small investment brokerage system, the Savings Banks Act to clarify the complaint handling procedure, and the Saemaeul Geumgo Act to strengthen management expertise of Saemaeul Geumgo. Among these, only the Savings Banks Act was passed and promulgated as originally proposed, while the Insurance Business Act was discarded after its alternative was incorporated into another bill. The rest were discussed until the end of the National Assembly term and then discarded.

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