Eight Major Economic Organizations Issue Public Appeal: "Further Commercial Act Amendments Threaten Corporate Management Rights... Join Forces"

Announcement at the Chamber of Commerce in Jung-gu, Seoul on the 24th
"Our economy faces a complex crisis... Deep concerns over Commercial Act amendment"
"Please help create an environment where companies can do their best"

The business community has once again expressed concerns over ongoing discussions for a second amendment to the Commercial Act, which, following the recent revision expanding directors' fiduciary duties to shareholders, now includes proposals such as the mandatory cumulative voting system. The organizations also appealed to the public to support Korean companies so they can focus on overcoming the economic crisis.

Park Iljun, Executive Vice Chairman of the Korea Chamber of Commerce and Industry, Lee Donggeun, Executive Vice Chairman of the Korea Employers Federation, Kim Changbeom, Vice Chairman of the Korea Economic Association, and executives of eight economic organizations held a press conference at the National Assembly Communication Office last March, urging the acting president to exercise the right to request reconsideration of the amended Commercial Act passed by the plenary session. Photo by Yonhap News

On July 24, eight major economic organizations?the Korea Economic Association, Korea Chamber of Commerce and Industry, Korea Employers Federation, Korea Federation of SMEs, Korea Federation of Middle Market Enterprises, Korea Listed Companies Association, Korea International Trade Association, and KOSDAQ Association?issued a statement titled "A Public Appeal from the Business Community for Overcoming the Economic Crisis" at the Chamber of Commerce in Jung-gu, Seoul.

The organizations stated, "Our economy is currently facing a complex crisis," diagnosing that "the weakening of industrial competitiveness and the deterioration of the trade environment have led to a decline in exports and intensified difficulties for the everyday economy." They continued, "We express deep concern over the ongoing legislative discussions for additional, even stronger measures, such as the mandatory cumulative voting system and expanded separate election of audit committee members, following the July 3 amendment to the Commercial Act that broadened directors' fiduciary duties."

The organizations particularly noted that, given the ongoing internal and external crises, the legislative push for further amendments poses a threat to corporate management rights. As a result, they argued that Korean companies could lose global competitiveness, which would negatively impact the overall economy.

They also emphasized that, although the amendment to the Commercial Act is being promoted as a means to strengthen the rights of minority shareholders, if the law is revised, attacks on management rights by external forces such as speculative capital will intensify.

The organizations pointed out, "Additional amendments to the Commercial Act could leave our companies defenseless against management threats from foreign speculative capital," and added, "This could lead to a weakening of corporate fundamentals and a decline in value, ultimately resulting in damage to shareholder value."

They further stated, "The business community will devote itself to active investment and workforce development to overcome the complex crisis," and promised, "We will take the lead in revitalizing the Korean economy and will also work harder to protect shareholder rights and improve corporate management transparency." They concluded by appealing to the public, "We ask the people to come together to create an environment where companies can do their best."

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