Lee Jae-myung, a prominent presidential candidate from the Democratic Party of Korea, announced on the 21st a pledge to revitalize the stock market, stating, "I will push for amendments to the commercial law to protect shareholder interests." The amendment to the commercial law promoted by the Democratic Party of Korea was thwarted due to the exercise of the veto power by Acting President and Prime Minister Han Duck-soo. However, former Representative Lee promised a stronger amendment by adding provisions that were opposed by the business community, such as expanding the concentrated voting system and the separation of the auditor election. The business community has raised concerns, stating, "We need to see the details, but there is a possibility that management rights could be infringed."
Former Representative Lee stated on Facebook, "I will open an era of a 5,000 stock index," while outlining plans to re-pursue the amendments to the commercial law. He mentioned, "I was also quite a large ant," referring to individual investors. He also wrote, "I will activate the concentrated voting system to ensure that a director representing minority shareholders can be appointed," and "I will gradually expand the separation of auditor elections to further enhance management oversight functions."
The concentrated voting system and the separation of auditor election were not included in the existing bill for amending the commercial law. Although they were included when the Democratic Party of Korea adopted the bill as a party position at the end of last year, they were removed during the voting process in reflection of the business community's concerns.
The concentrated voting system grants a number of voting rights equal to the number of directors being appointed when electing two or more directors. For example, when selecting three directors, a shareholder with one share can cast three votes. This enables minority shareholders to easily elect directors they have recommended since they can allocate all three votes to a single candidate.
However, it can provide grounds for management rights disputes. A business community official noted, "There is a possibility that foreign private equity funds or so-called 'corporate raiders' could interfere with corporate management," expressing concerns that it could allow for management decisions to be re-evaluated afterwards, potentially stifling management activities and disrupting direction.
The separation of auditor election proposed by former Representative Lee is still not fully defined, but it appears to mean increasing the number of auditors elected by other directors. A business community official mentioned, "We are continuously reviewing this internally regarding the push for amendments to the commercial law, but we need to see the details as they emerge." Another official from the business community also said, "It seems we will need to monitor the details further in order to respond."
Furthermore, former Representative Lee stated, "We will institutionalize the principle that a listed company's treasury shares should be retired to return to shareholders" and also noted, "We will improve the system so that new shares are preferentially allocated to ordinary shareholders of the parent company during so-called 'split listings.'"
In response, the business community criticized, "Treasury shares were obtained to enhance shareholder value, but legally enforcing the retirement of treasury shares emphasizes only the concerns that they can be misused." Another business official remarked, "If the retirement of treasury shares and the concentrated voting system are implemented, management rights could be transferred, and outside forces could excessively intervene, which is expected to complicate corporate management."