The Democratic Party will hold an investor meeting related to the commercial law amendment centered on the 'duty of loyalty of directors to shareholders' in early next month. Amid opposition from the government, ruling party, and the business community citing concerns over management rights being undermined, the Democratic Party views the commercial law amendment as an issue that will attract the support of 8 million individual investors and is pushing it as a party policy.
◇Public meeting for asset management firms and minority shareholder groups
On the 28th, according to ChosunBiz's coverage, the Democratic Party will hold a 'Meeting for the Protection of Shareholder Rights' on the afternoon of the 4th at the National Assembly. Jin Sung-jun, the chair of the policy committee, along with the Democratic Party's Korean Stock Market Activation TF (hereafter Director General revival TF, Chairperson Oh Gi-hyung), will preside over the event.
Participants will include representatives from investment companies like VIP Asset Management and Truston Asset Management, representatives from minority shareholder groups, and members of civil society organizations such as the Economic Reform Network and People's Solidarity for Participatory Democracy. The meeting is intended to facilitate a public discussion between the party's policy committee, the Director General revival TF, investors, and civil society organizations. They will address topics such as 'expanding the protection of shareholder rights' and 'recovering trust in the capital market' by discussing the legal specification of the 'duty of loyalty to shareholders.'
Previously, the Democratic Party held a forum on the amendment of the commercial law in December of last year. At that time, Representative Lee Jae-myung led the discussion personally, inviting both the business community and individual investors to engage in debate.
However, both sides remained at a level of reiterating their existing positions and failed to find a common ground. Corporations such as Hyundai Motor and SK cited the case in which the overseas activist fund Elliott demanded excessive dividends from Hyundai Motor in 2019, expressing concerns that the commercial law amendment could dampen corporate investment.
◇Prioritize duty of loyalty and electronic shareholders' meetings… 'Targeting individual investors' sentiments'
The Democratic Party is pursuing a revised proposal excluding the 'concentrated voting system' and 'separate election of audit committee members' included in existing party policy. They plan to expand the subjects of the duty of loyalty of directors from 'company' to 'company and shareholders' and to introduce electronic shareholders' meetings for listed companies. Furthermore, they added a code of conduct stipulating that directors must equitably protect the interests of 'all shareholders.' The aim is to find common ground by withholding the two clauses that corporations are most averse to.
However, the ruling party and the business community maintain that they cannot accept this. They argue that legalizing the 'duty of loyalty to shareholders' excessively constrains corporate governance and undermines the willingness of corporations to grow. Organizations such as the Federation of Korean Industries, Korea Chamber of Commerce and Industry, Korea Federation of Small and Medium Enterprises, Korea Enterprises Federation, and Korea International Trade Association also jointly issued a statement.
The amendment bill is left with only the procedure to be presented to the plenary session of the National Assembly. The National Assembly's Legislation and Judiciary Committee voted on this commercial law amendment on the 26th, but National Assembly Speaker Woo Won-sik did not present it to the plenary session. The People Power Party decided to request the exercise of the government's veto right and was entirely absent from the votes in the Judiciary Committee's full meeting.
The Democratic Party is expecting a confrontation between the ruling and opposition parties centered on the topic of 'protecting individual investors' in the early presidential election phase. They believe that the more the ruling party opposes the commercial law amendment, the greater the backlash from individual investors will be.
A member of the Director General revival TF noted during a currency that 'since it has already passed through the Judiciary Committee, there is no reason for the National Assembly Speaker not to present the bill,' adding that 'the ruling party is saying to amend only the capital market law as part of 'fine-tuning regulation,' but is not properly engaging in discussions at the standing committee level.'
He added, 'Protecting individual investors is equivalent to restoring trust in the market and is a core concern for voters,' indicating that the commercial law amendment could be advantageous to the opposition party during the election phase.