As the Democratic Party of Korea pushes for supplementary legislation on the Commercial Act amendment, there is a difference in speed regarding the mandatory concentrated voting system with the Presidential Office. The Democratic Party has stated that it will process the amendment, which includes expanding the concentrated voting system and separate election of audit committee members, by the deadline of the last day of the July extraordinary National Assembly, which is August 4th. The Presidential Office is contemplating the timing of implementation to listen to the concerns of the business community. Given that this is the early stage of a government where the influence of the Presidential Office is strong, it implies that the possibility of passing it through the National Assembly early next month according to the ruling party's policy is low.
According to reports compiled on the 25th, the Presidential Office recently listened to concerns from corporations related to the concentrated voting system during a closed meeting on the Commercial Act as per President Lee Jae-myung's directive to gather opinions on supplementary legislation. Kim Yong-beom, head of the Presidential Office's policy division, attended the meeting. It was a forum where the Korea Listed Companies Association, Align Partners, and academics had a debate on the pros and cons. It has been reported that there were claims from the listed companies association and academia that the mandatory concentrated voting system would be detrimental to the defense of management rights.
A source from the Presidential Office told ChosunBiz, "Supplementary legislation on the Commercial Act amendment needs to communicate with the party," while noting that "the party is moving (a bit more) quickly." This indicates some disparity with the ruling party's claim that it will expedite the supplementary legislation within the July extraordinary National Assembly. Only ten days remain until the deadline announced by the Democratic Party for processing the law.
The prevailing opinion within the ruling party is that the background behind the Presidential Office contemplating the timing for pushing the mandatory concentrated voting system is the 'flood of grievances' from corporations. While the 'duty of loyalty to shareholders' has been identified as a key issue during the Commercial Act amendment process, the fact is that the fear of the concentrated voting system is greater among the business community. A party official stated, "The business community is even more opposed to the mandatory concentrated voting system than to the separate election of audit committee members," adding, "As grievances are also concentrated with the president's pro-business stance, there is a mood to adjust the pace for now."
The Commercial Act that passed the National Assembly's plenary session earlier this month includes ▲expanding the duty of loyalty of directors from companies to the company and shareholders ▲increasing the introduction of electronic shareholders meetings ▲limiting the voting rights of the largest shareholders and related parties to 'a combined 3%'. In addition to this, the Democratic Party is also pushing for ▲mandatory concentrated voting system ▲expansion of separate election of audit committee members. This was pledged by President Lee during his time as the Democratic Party leader and was included in the presidential election pledge book. Previously, both ruling and opposition parties agreed to process only part of the amendment to the Commercial Act, while deferring discussions on the mandatory concentrated voting system and the expansion of the separate election of audit committee members.
The Democratic Party is considering not only supplementary legislation on the Commercial Act amendment but also measures to mitigate the crime of breach of trust. The party has announced that the deadline is the plenary session of the National Assembly on August 4th. Democratic Party floor leader Moon Jin-seok and chief spokesperson Park Sang-hyuk stated during a meeting with reporters on the 17th, "We are considering the timing for the supplementary legislation on the Commercial Act amendment to be on the 4th of next month (during the plenary session)." However, there are predictions that this timing may be delayed depending on the mood of the Presidential Office. It means that while the law will be amended, the timing will be adjusted.
A source from the ruling party said, "Since this is a presidential pledge, it would be difficult not to push for the mandatory concentrated voting system," while adding, "Unlike the party that is pushing ahead, it does not seem that the Presidential Office is in a hurry to implement it, so further legislative discussions should be continued."