Representative Ko Dong-jin of the People Power Party (Gangnam District, Seoul), a member of the Public Administration and Security Committee, announced on 2nd that he submitted the "Corporate Embezzlement Special Act (Company Act amendment)" in response to the amendment to the Company Act being pursued by the Democratic Party of Korea.

The Democratic Party of Korea is pushing for an amendment to the Company Act that extends the duty of loyalty of directors not only to the company but also to "shareholders." In response, Representative Ko noted that it is "a legislative alternative to prevent unnecessary lawsuits and infringement of corporate management rights."

People Power Party member Ko Dong-jin speaks after completing a question to the government related to the economy at the 5th plenary session of the 422nd National Assembly (extraordinary session) held at the National Assembly Hall in Yeouido, Seoul, on the afternoon of the 13th of last month. /Courtesy of News1

Representative Ko pointed out, "While I agree with the intent that corporations should be loyal to shareholders, as Article 126 of the Constitution states, 'corporations cannot be controlled or managed,' if the duty of loyalty of directors is expanded to shareholders, the scope of embezzlement could be excessively broadened."

The Democratic Party of Korea's Company Act amendment contains provisions that expand the duty of care of directors from 'companies' to 'companies and shareholders,' raising concerns that management may be liable in civil and criminal cases in conflicts of interest with individual shareholders.

The amendment proposed by Representative Ko includes ▲ limiting the criteria for special embezzlement under the Company Act to 'acts contrary to duties for the company' and ▲ formalizing the 'business judgment rule' presented by the Supreme Court in 2004 into current law. In other words, if a director acts based on prudent judgment for the benefit of the company without the intent of benefiting themselves or third parties, they cannot be punished for embezzlement even if the company incurs losses.

Representative Ko emphasized, "While it is fundamental that corporations should be loyal to shareholders, the autonomy and freedom of the corporate economy must also be guaranteed," and stated, "The political sphere must clearly recognize that corporations are not subjects of control but partners that lead the economy of Korea."

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