Tackling Korea Discount: DP wants to add 'shareholders' for directors' duties in writing, PPP objects

At the National Assembly.

The opposition party passed revisions to the Commercial Act mandating corporate directors' duty to shareholders, not just to companies.

The ruling party protested, saying it would get businesses by ankles.

Our Kim Do-yeon explains.

In efforts to tackle the so-called "Korea Discount" the Democratic Party of Korea unilaterally on Thursday passed revisions to the Commercial Act.

However, the ruling People Power Party has already warned that it will request Acting President Choi Sang-mok to veto the bill.

The revision aims to add the word "shareholders" to the wording for the "Duty of Loyalty by Directors" now saying, "perform their duties in good faith for the interest of the company AND the shareholders."

In addition to changing the wording the revision aims to make it mandatory for listed companies to hold virtual shareholder meetings.

The essence of this statement is simple: South Korea is a democratic republic and must represent the interests of its people. Likewise, company directors must act faithfully for the company and its rightful owners—the shareholders. This is the core principle.

The PPP said this will lead to lawsuits and make it hard for companies to make decisions saying small investors are not contractually bound to the companies with different types of investors aiming for different results.

"If passed, companies will be shackled with enormous restraints as they compete on the global stage. Instead of moving forward toward the world and the future through challenge and innovation, South Korean companies will be preoccupied with appeasing all shareholders, merely striving to maintain the status quo."

While the ruling PPP is looking to make sure this bill is not passed the Governor of the Financial Supervisory Service Lee Bok-hyun said he will put his job on the line to stop the Acting President from vetoing it.

He said the bill may have side effects, but vetoing would only bring the improving shareholders' values discussion back to square one.

Considering the FSS Governor is a President Yoon Suk Yeol appointee this sends a strong message to the public.

To this, the floor leader of PPP Kweon Seong-dong said the Party has a consensus of rejecting the bill, and that Lee's actions were inappropriate considering that he's not even a Cabinet member who has jurisdiction over this law.

Meanwhile, the Federation of Korean Industries also released a statement requesting a veto saying the revision comes with severe side effects and has aspects that are unconstitutional.

Kim Do-yeon, Arirang News.