Ruling Party Pushes Yellow Envelope Act and Commercial Act... Will It Accelerate "Carrot" Measures Like Easing Breach of Trust Penalties?

Ruling Party to Launch Task Force for Rationalizing Economic Criminal Penalties Soon
"Carrot" Measures in Response to Business Community's Backlash Over Yellow Envelope Act and Commercial Act Amendments

Following the passage of the Yellow Envelope Act (the amendment to Articles 2 and 3 of the Trade Union Act), the Democratic Party of Korea is expected to accelerate efforts to ease economic criminal penalties, such as the relaxation of the crime of breach of trust, as it prepares to handle the second round of amendments to the Commercial Act. After pushing through legislation that faced strong opposition from the business community, the party is now offering a "carrot" in the form of easing economic criminal penalties.

According to political sources on August 24, the Democratic Party plans to soon launch an in-house "Task Force for the Rationalization of Economic Criminal Penalties and Civil Liability."

Once the task force is launched, it will discuss revising criminal provisions such as breach of trust, abuse of authority, obstruction of business, and the dissemination of false information. It will also consider introducing systems to strengthen civil liability, such as punitive damages, class action lawsuits, and a Korean-style discovery (evidence disclosure) system.

The party explained that, unlike major advanced countries that address illegal acts arising from business activities through civil compensation and fines, South Korea imposes excessive criminal penalties such as breach of trust, and thus intends to align with global standards.

The move to resolve long-standing demands from the business community by easing the crime of breach of trust is seen as a conciliatory gesture. On this day, the Democratic Party passed the Yellow Envelope Act and announced that it would handle the second round of amendments to the Commercial Act on August 25. As domestic and international companies and the business community have intensified their opposition, and concerns have grown about negative impacts on the domestic investment and stock markets, momentum has quickly built for alternative measures.

On this day, the Korea Employers Federation and five other major economic organizations issued a statement expressing regret over the passage of the Yellow Envelope Act in the National Assembly, emphasizing, "The National Assembly and the government must establish thorough supplementary measures through close communication with the business community during the grace period."

Previously, Democratic Party lawmaker Kim Taenyeon had proposed an amendment to the Commercial Act and Criminal Act last month, which included deleting the special breach of trust provision from the Commercial Act and codifying the "business judgment rule" in the Criminal Act. However, as party unity around handling contentious bills strengthened, discussions effectively stalled. Now, amid shifting sentiment both inside and outside the party, efforts to supplement the legislation to reflect the concerns of the business community are gaining momentum.

Earlier, the six major economic organizations and the American Chamber of Commerce in Korea (AMCHAM) visited the National Assembly to request a postponement and reconsideration of the passage of key economic bills. The legal community has also continued to call for the establishment of civil resolution measures.

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