The ruling and opposition parties agreed on the 2nd to process the contentious '3% rule' of the commercial law amendment. The 3% rule stipulates that the combined voting rights of the largest shareholder and related parties are limited to 3% when selecting audit committee members, aiming to curb the influence of major shareholders and strengthen the rights of minority shareholders, which the ruling party has been promoting. Another contentious issue, the expansion of separate election of audit committee members and the cumulative voting system, will continue to be discussed based on an agreement after holding public hearings. The ruling and opposition parties, which have been in conflict since the inauguration of the Lee Jae-myung government, have opened the door to cooperation by agreeing to process a contentious bill for the first time.
The ruling and opposition parties announced that they reached this agreement after a meeting of the 2+2 (floor leaders and the Legislation and Judiciary Committee) in the afternoon.
Kim Yong-min, the ruling party's member of the Legislation and Judiciary Committee, said, "We have agreed to handle the part of separately electing audit committee members by supplementing the 3% rule" and noted, "We have agreed to discuss the cumulative voting system and expanding the number of audit committee members from 1 to 2 or all members through public hearings in the future."
The Democratic Party has been pushing for an 'expansion of separately elected audit committee members' that increases the number of audit committee members from the current 1 to 2 or more, applying the '3% rule' to limit the combined voting rights of the largest shareholder and related parties to 3%. In this, it was decided to include the 3% rule in the current commercial law amendment and to discuss the expansion of audit committee members later.
During the Moon Jae-in administration in 2020, the Democratic Party introduced a system to separately elect audit committee members from internal and external directors and pushed for the 3% rule. At that time, due to backlash from the business community and the opposition, the '3% rule for related parties' was applied only to internal directors, but the party intends to complement this by applying the range to 'external directors' in line with the original legislative intent.
The cumulative voting system allocates shareholders' voting rights equally to the number of directors (executives) to allow for concentrated voting. This is also presented by the Democratic Party as one of the five key issues in the commercial law amendment because it can strengthen the rights of minority shareholders.
Prior to this, the ruling and opposition parties agreed to expand the scope of directors' duty of care to include 'the company and shareholders' instead of just 'the company,' convert external directors to independent directors, and mandate electronic shareholders' meetings during the morning's review by the Legislation and Judiciary Committee's first subcommittee.
Representative Jang Dong-hyuk, the opposition party's member of the Legislation and Judiciary Committee, said, "Amending the commercial law will have a tremendous impact on our capital market and stock market. I believe that when the ruling and opposition parties agree on a bill, we can send a much more positive message to the market," and added, "Although there were some disagreements today, we were able to draw out as much consensus as possible on the other parts so that the bill could be processed in the subcommittee."
Representative Kim said, "Since the inception of the Lee Jae-myung government, we are working hard in the National Assembly to fulfill the pledge of national unity and revitalizing the people's economy," adding, "The fact that the ruling and opposition parties have agreed to process the key components of the commercial law amendment is the first case of this."