The Democratic Party of Korea activated a special committee called 'KOSPI 5,000' on the 23rd to discuss improvements to restore trust in the domestic stock market and announced it would urgently push for amendments to the Commercial Act.
Chairperson Oh Gi-hyung met with reporters after the special committee launch ceremony that day and noted, "The president mentioned this during the election campaign, and it's right to process it as quickly as possible to meet investors' expectations in the current KOSPI market." He also added, "I am persuading both inside and outside the party." He further stated, "The Ministry of Justice, which had opposed the amendment to the Commercial Act, has expressed a general agreement and support in principle."
The special committee is expected to discuss the timing for processing the amendment to the Commercial Act after discussions with the leadership in the National Assembly. Chairperson Oh added, "Since the leadership has a proactive stance on the amendment to the Commercial Act, I expect that we can promote specific schedules in consultation with the leadership."
The amendment to the Commercial Act, promoted by the Democratic Party, aims to expand the duty of loyalty for directors from 'the company' to 'the company and shareholders' and to mandate that listed companies hold electronic shareholder meetings along with general meetings. During the Yoon Suk-yeol administration, the Democratic Party passed a Commercial Act amendment at the plenary session, excluding the expansion of separate elections for audit committee members and the mandatory concentrated voting system to draw voters away from the People Power Party, but it was rejected in the National Assembly plenary session as it failed to surpass the 200-seat threshold for re-vote in April. Subsequently, the Democratic Party decided to re-promote a more robust amendment to the Commercial Act, including the previously deleted content of 'gradual expansion of separate elections for audit committee members' and 'activation of the concentrated voting system', as well as adding the 3% rule and removing the implementation grace period.
However, business circles and opposition parties are expressing concern that strengthening directors' responsibilities could lead to an increase in lawsuits for breach of duty. Regarding this, Chairperson Oh stated, "We had previously asked for various ideas, and we are continuously creating, modifying, and discussing the draft considering those. I believe we can communicate sufficiently."
Regarding the newly promoted so-called '3% rule', he emphasized, "It's not a completely new topic; it's an issue that has always existed in our country’s Commercial Act," and added, "Understanding it as reinforcing a new system is a misunderstanding." The 3% rule restricts the largest shareholders and their affiliated persons from exercising their voting rights over 3% of the total shares issued during the appointment of the auditors or audit committee members of listed companies. This means that regardless of how many shares the largest shareholders possess, they can only exercise voting rights up to 3% on audit appointment matters, aiming to limit the influence of large shareholders.
During the meeting, opinions were also exchanged on issues related to the illegal short selling system, improvement of unfair trading detection systems, and the issue of stock buybacks. President Lee Jae-myung had previously indicated during a policy briefing with the financial investment industry as a candidate in the 21st presidential election that "in principle, the company's treasury shares will be canceled to be returned to shareholders' interests through institutionalization." The aim is to fundamentally resolve the undervaluation issue in the domestic stock market through canceling treasury shares to adjust the return on equity (ROE) and price-to-book ratio (PBR).
The Democratic Party's leadership in the National Assembly emphasized that they would promptly promote amendments to the Commercial Act to usher in the 'Korea Premium Era'.
Kim Byeong-ki, the Democratic Party's floor leader, emphasized earlier at the launch ceremony that "President Lee Jae-myung and the Democratic Party's economic policy orientation is clear: establishing a fair market order" and stated, "We will create a trust-based environment where foreigners can invest with confidence, ending the 'Korea Discount' and opening the 'Korea Premium' era."
Heo Young, the Democratic Party's senior deputy floor leader, also remarked, "There are market responses and concerns expressing doubts about whether the Democratic Party can carry out amendments to the Commercial Act due to conglomerates. The launch of the KOSPI 5000 Special Committee embodies the determination to resolve worries and various suspicions and to certainly amend the Commercial Act," adding, "We will methodically amend various laws, including the Capital Markets Act, tax laws, and criminal procedure laws for fair trade, to create the Korea Premium era."