The bill to amend the commercial law, which includes "fiduciary duty of directors to shareholders" and "mandatory electronic shareholders' meetings," was rejected in the National Assembly's plenary session on the 17th. Efforts were made to delete certain clauses to draw defect votes from the People Power Party, but ultimately failed to exceed the quorum of 200 votes for re-voting. The Democratic Party plans to reintroduce the amendment, including the strategically removed provisions on "separate election of audit committee members" and "cumulative voting system."
The National Assembly held a plenary session that afternoon and raised the amendment to the commercial law as the re-vote agenda. According to the National Assembly Act, a bill that the president requests re-voting (veto power) can be submitted for re-voting in the National Assembly. It must be approved by a majority of the 300 sitting members and two-thirds of the present members to pass. If rejected, it is immediately discarded. On this day, the voting results did not exceed 200 votes.
The discarded amendment to the commercial law contains provisions to ▲expand "the target of directors' fiduciary duty" from the existing company to "the company and its shareholders" and ▲establish the obligation that directors must protect the interests of all shareholders when performing their duties. It also allowed listed companies to hold electronic shareholders' meetings along with regular meetings. This was a bill promoted by the Democratic Party under the banner of "capital market advancement."
However, considering the concerns of the business community, provisions for ▲expanding the separate election of audit committee members and ▲mandatory cumulative voting were excluded from the existing party line. Since there is a coexistence of public opinion on protecting minority shareholders within the People Power Party, the strategy was to create negotiation space.
As a result, the amendment to the commercial law began the process of being discarded about a month after passing the National Assembly's plenary session on the 13th of last month. It was approved with the support of 184 members from the progressive camp, including the Democratic Party, but Han Duck-soo, the acting president and prime minister, exercised his veto power. Subsequently, the chairman of the National Assembly, Woo Won-sik, accepted the Democratic Party's request to collectively submit it as a re-vote agenda along with the special counsel law regarding Myung-tae-kyun.
The Democratic Party is paying attention to the amendment of the commercial law as a favorable factor to secure the votes of individual investors in the presidential election phase. It believes that amending the law is essential to protect minority shareholders and resolve the Korea discount (under-evaluation of Korean stocks). On the other hand, the government and ruling party believe that amending the commercial law would dampen management rights. They hold the position that it is sufficient to amend the capital market law to implement "fine regulations" only for mergers and divisions of listed companies.