Companies Appeal to National Assembly's Political Affairs Committee: "Regulations Hinder Value-Up"

KCCI Hosts Meeting with Yoon Han-hong, Chairman of the National Assembly's Political Affairs Committee
Chairman Chey Tae-won Proposes Governance, Fair Trade, and Financial Issues to Chairman Yoon
Points Raised on Expanded Fiduciary Duty Law and 3% Rule

Key figures from the industrial and financial sectors voiced a unanimous opinion to the Chairman and members of the National Assembly’s Political Affairs Committee that regulatory bills enacted in the 22nd National Assembly, such as the expansion of directors' fiduciary duties, would hinder value-up (enhancement of corporate value).

Chairman Chey Tae-won of the Korea Chamber of Commerce and Industry delivered a welcoming speech at the Korea-Czech Business Forum held at a hotel in downtown Prague, Czech Republic, on the 20th (local time), attended by President Yoon Suk-yeol and Czech President Pavel.
[Photo by Yonhap News]

The Korea Chamber of Commerce and Industry (KCCI) announced on the 26th that it held a 'Meeting with Yoon Han-hong, Chairman of the National Assembly Political Affairs Committee' at the Chamber of Commerce building in Jung-gu, Seoul, to propose economic issues and difficulties related to fair trade and finance. Ahead of the first regular session of the 22nd National Assembly, with numerous bills introduced that could cause corporate management instability under the pretext of corporate value value-up and boost-up, KCCI organized the meeting to communicate with the Political Affairs Committee, the National Assembly’s relevant committee, on fair trade and financial issues, the KCCI said.

The meeting was attended by three members from the National Assembly side, including Chairman Yoon, Representative Kwon Seong-dong, and Kang Min-guk, the Political Affairs Committee secretary. From the economic sector, 18 representatives from industry and finance participated, including KCCI Chairman Choi Tae-won, Samsung Life President Hong Won-hak, Hanwha President Shin Hyun-woo, Emart CEO Han Chae-yang, Doosan Enerbility Vice Chairman Jeong Yeon-in, Naver CEO Yoo Bong-seok, Hana Bank President Lee Seung-yeol, Mirae Asset Securities Vice Chairman Kim Mi-seop, Meritz Fire & Marine Insurance CEO Kim Jung-hyun, Shinhan Card CEO Moon Dong-kwon, Quarasoft CEO Byun Chang-hwan, and KCCI Small and Medium Business Committee Chairman Jeong Ki-ok.

Chairman Choi proposed issues related to corporate governance, fair trade, and financial matters to Chairman Yoon. The industry and financial representatives attending the meeting suggested 18 tasks, including cautious consideration of expanding directors' fiduciary duties, reconsideration of expanding the '3% rule' for listed companies, improvement of the penal system under the Fair Trade Act, priority abolition of securities transaction tax, and expansion of financial institutions’ subsidiary investment limits. The Political Affairs Committee Chairman also responded to related issues. The 3% rule limits the voting rights of major shareholders or individual shareholders to a maximum of 3% in key decision-making processes such as the appointment and dismissal of audit committee members. It has been criticized for violating the 'one share, one vote' principle by uniformly regulating voting rights to 3% regardless of shareholding ratio.

Industry representatives stated, "Recently, numerous value-up and boost-up bills strengthening corporate governance regulations have been introduced in the National Assembly under the pretext of resolving the 'K-discount' (undervaluation of the Korean stock market)," and they refuted the bills point by point. Regarding the bill to expand directors' fiduciary duties, they pointed out that "it would increase judicial risks related to directors' business judgments, preventing decisions for long-term corporate growth and thus hindering value-up." Concerning the 3% rule, they expressed concern that "instead of strengthening minority shareholder rights, which is a fundamental principle of company law, it would interfere with important management decisions such as mergers and splits, weakening corporate competitiveness."

The representatives emphasized, "Rather than producing many regulatory bills with numerous side effects that do not align with global standards, it is important to provide legislative and policy support in directions that enhance the attractiveness of the domestic stock market, such as establishing tax benefits for long-term stockholding and separate taxation on dividend income."

Regarding the penal system under the Fair Trade Act, they noted, "In major countries, there are no penal provisions in competition law or they exist only in limited areas such as collusion, whereas our Fair Trade Act includes penal provisions for most violations," and added, "It is necessary to abolish penal provisions other than collusion or convert them to fines to align with global standards."

Financial sector representatives also pointed out that the securities transaction tax should be abolished before discussing the financial investment income tax. One attendee emphasized, "Since discussions on the financial investment income tax alone have limitations in enhancing stock market value, the securities transaction tax should be completely abolished prior to financial investment income tax discussions to expand stock market participants and improve liquidity."

He mentioned, "In the recent 'Big blur' situation where the boundaries between financial and non-financial sectors are becoming ambiguous, financial companies face difficulties in developing and providing services linked to non-financial companies due to the separation of banking and commerce regulations. It is necessary to change the scope of financial institutions’ subsidiary investments from the current positive list system to a negative list system and to expand the scope of incidental businesses under the Banking Act."

Additionally, the representatives proposed support for export financing in the defense sector, improvement of the application targets of the Large-scale Distribution Business Act, careful discussion on online platform regulation measures, relaxation of retirement pension asset management regulations, and rationalization of the indemnity insurance system.

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