The decision to dismiss the impeachment of Acting President and Prime Minister Han Duck-soo has shifted the responsibility of determining whether to exercise the veto on the amendment to the Commercial Act to an acting authority. The 'F4 (Finance4)', an informal consultative body of the top macroeconomic and financial authorities, which has spoken with one voice on various economic issues, is now showing differing opinions regarding the 'Commercial Act amendment' issue, indicating that the acting authority's worries will deepen. F4 refers to Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok, Bank of Korea Governor Lee Chang-yong, Financial Services Commission Chairman Kim Byeong-hwan, and Financial Supervisory Service Head Lee Bok-hyun.

On the 24th, the Constitutional Court delivered a decision of 'impeachment dismissal' to Acting President Han Duck-soo. Thus, the fate of the amended Commercial Act now lies in his hands. The amendment passed in the National Assembly was sent to the government on the 21st. The government can announce or exercise its right of veto (request for reconsideration) on the amendment by April 5.

The amendment to the Commercial Act sent to the government includes provisions that broaden the scope of the duty of loyalty of corporate directors from the existing 'company' to 'companies and shareholders' and states that the interests of all shareholders must be treated fairly to protect the interests of the majority shareholders. The business sector is raising objections, arguing that minority shareholders with differing opinions from the board could hinder management by filing an excessive number of lawsuits.

The Prime Minister, Han Deok-soo, who returned to his duties after the impeachment bill was dismissed by the Constitutional Court, expresses his stance to the press as he commutes to the Government Seoul Building in Jongno, Seoul, on the morning of the 24th. /Courtesy of News1

◇ FSS and the Bank of Korea say, 'Commercial Act amendment necessary' VS Financial Services Commission opposes

The F4, serving as a barometer for the direction of economic issues, has consistently presented a united front. However, regarding the amendment to the Commercial Act, the single front is shaking. While both the Financial Supervisory Service and the Bank of Korea regard the amendment as necessary, the Financial Services Commission opposes it, and the Ministry of Economy and Finance maintains a cautious stance.

Lee Bok-hyun, head of the Financial Supervisory Service, recently said he would 'stake his position' if the veto on the amendment to the Commercial Act were exercised. The Bank of Korea also recently published a report through a BOK issue note titled 'The Impact of Shareholder Return Policies on Corporate Value,' concluding that 'enhancing shareholder protection and expanding shareholder returns generally has a positive impact on corporate value.'

Although the report added that it is 'not the official view of the Bank of Korea but the personal opinion of the authors,' the content suggests support for the movement to amend the Commercial Act. This report was written by former staff members of the Bank of Korea's Financial Market Department's stock market team.

On the other hand, Financial Services Commission Chairman Kim Byeong-hwan noted last month that there are still concerns among the business community about the side effects of the proposed amendment to the Commercial Act, saying these should be adequately considered. The Financial Services Commission has drafted a capital markets law amendment as an alternative to the amendment of the Commercial Act.

The position of Deputy Prime Minister Choi Sang-mok, a member of the F4, remains uncertain. In a policy document titled 'Economic Policy Agenda 2022' published four years ago, he argued that 'whether a director is appointed by a controlling shareholder or a non-controlling shareholder, they should not follow the directives of the shareholder group that appointed them or represent their interests,' stating that 'directors must fulfill their fiduciary duties for the company and all shareholders.'

However, standing in the position of 'acting authority' that must consider political judgments, he has recently only stated, 'I will listen to the opinions of the relevant ministries,' maintaining a stance of 'no position.'

During the first plenary session of the 423rd National Assembly (extraordinary session) held on the afternoon of the 13th at the National Assembly Hall in Yeouido, Seoul, the partial amendment bill to the Commercial Act (alternative) was passed with 184 in favor, 91 against, and 4 abstentions out of 279 present members among 300 total members. /Courtesy of News1

◇ What is the choice of the Prime Minister?… 'Will priorities fall out of place' and 'pension reform may be entangled'

Amid ongoing debates within the government, the fate of the amendment to the Commercial Act has become unclear, and the responsibility now lies with the returned acting authority. Attention is focused on what choice the acting authority, who just six months ago expressed concerns about 'the risk of economic environment contraction,' will make regarding the push for the amendment.

The acting authority stated six months ago that there are both opinions that 'legal amendments are necessary for the protection of minority shareholders' and concerns that 'it may stifle the management environment,' and that 'the government is listening to diverse opinions from all sectors and will formulate a position that protects shareholders while alleviating concerns about the contraction of the management environment.'

The business sector opposing the amendment to the Commercial Act is concerned that, upon the return of the acting authority, the issue may simply pass without exercising the veto. Given the prolonged period of suspension from duty, the issue may not be a priority for the acting authority. There is also the possibility that if the impeachment of President Yoon Suk-yeol is upheld, there may quickly be a shift to a presidential election atmosphere.

Some analysts suggest that if the amendment to the National Pension Act, which recently passed the National Assembly, is tied into this situation, the acting authority's calculations could become even more complicated. The National Assembly recently agreed on a national pension reform plan under the 'more contributors, more recipients' scheme for the first time in 18 years.

In the political arena, many believe that since it results from an agreement between the ruling and opposition parties, the acting authority is unlikely to exercise veto power. However, there are growing calls for the veto to be exercised and re-discussed, in response to criticisms that 'only the younger generation bears the burden.' The proposed amendment to the Commercial Act, promoted to alleviate the 'Korea discount,' could help delay the depletion of the national pension, suggesting that if it fails, this backlash may intensify.

A spokesperson from the Prime Minister's Office stated regarding the exercise of veto power over the amendment to the Commercial Act that 'we will listen to a variety of perspectives from all sectors and make a judgment.'