Minjoo Predicts 'Commercial Act Amendment' to be Passed in Plenary Session on 27th... Strong Opposition from People Power Party

The amendment to the Commercial Act, centered on the 'expansion of directors' fiduciary duties to shareholders,' has passed the bill review subcommittee of the National Assembly's Legislation and Judiciary Committee, bringing its passage within the February extraordinary session within reach. However, the ruling party is opposing the bill's progress, arguing that it seriously threatens corporate management activities, signaling potential last-minute turmoil.

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According to the National Assembly on the 25th, the floor leaders of the ruling and opposition parties will attend a meeting presided over by Speaker Woo Won-sik in the afternoon to discuss contentious issues including the amendment to the Commercial Act. The amendment expands the scope of directors' fiduciary duties from the existing 'company' to 'company and shareholders' and mandates the introduction of electronic general meetings for listed companies.

However, provisions such as the 'introduction of cumulative voting' and 'separate election of audit committee members,' which the Democratic Party had been pushing as party policy, have been left pending in the subcommittee for further review. The amendment is scheduled to be processed at the full meeting of the Legislation and Judiciary Committee on the 26th and, if approved at the plenary session on the 27th, will take effect from March next year. The opposition party is even considering the possibility of passing it unilaterally at the plenary session.

The ruling party and business circles strongly oppose the Democratic Party's proposed amendment to the Commercial Act, claiming it could infringe on management rights. On the same day, the People Power Party decided to request Acting President and Deputy Prime Minister for Economy and Minister of Strategy and Finance Choi Sang-mok to exercise the right to request reconsideration (veto) on the amendment to the Commercial Act.

Kwon Seong-dong, floor leader of the People Power Party, said at the morning floor strategy meeting at the National Assembly, "If the Democratic Party truly cares about businesses and the economy, it should immediately withdraw the bill and accept the Capital Market Act amendment proposed by our party as an alternative to protect minority shareholders' interests." Park Soo-min, spokesperson for the People Power Party, told reporters right after the floor strategy meeting, "We must be very cautious, but it is regrettable that the bill was hastily passed unilaterally, and we will definitely request the right to request reconsideration."

Meanwhile, eight economic organizations including the Korea Economic Federation issued a statement immediately after the bill passed the subcommittee of the Legislation and Judiciary Committee, expressing concerns that "this amendment to the Commercial Act will lead to a flood of lawsuits against directors and be abused as a tool for activist funds to attack management rights, making South Korea a difficult country to do business in," and warned that "it will deepen the Korea discount and ultimately cause enormous damage to honest domestic small investors."

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