Ministry of Justice reviewing provisions on ‘directors’ efforts to protect shareholders’… Controversy over passing the revision committee

Without listening to the opinions of businessmen and others
Enforcing amendments to the Commercial Act and Capital Market Act
Some criticize “political revisions”

While the Ministry of Justice is pushing for revisions to the Commercial Act and the Capital Markets Act that include the ‘protection of shareholders’ interests,’ confusion is emerging among related ministries or lack of preparation is emerging. Initially, whenever the Commercial Act is revised, the Ministry of Justice creates a revision committee made up of experts and collects various opinions, but in this revision, unusually, there is no movement to form a committee. There is also a rush to announce the revised bill without even completing the hearing of opinions from stakeholders, including businessmen.

According to the legal community on the 15th, the Ministry of Justice has not established a Commercial Act Revision Committee while promoting a commercial law amendment aimed at protecting shareholders' interests. Although it is not necessary to create a committee to revise the Commercial Act, there is a precedent for creating a committee and collecting various opinions from experts when making large or small revisions.

A legal figure who has served as a member of the revision committee several times interpreted, “Making an amendment without a committee is proof that the revision is being rushed and is somewhat of a political revision.” An official from the Ministry of Justice said, “Even without a committee, we are listening to the opinions of officials in various ways.”

It is known that the Ministry of Justice is considering adding the clause 2 of Article 382-3 of the Commercial Act, which states that ‘directors must strive to protect the legitimate interests of shareholders while performing their duties’ in this amendment. In addition, it is being considered to include in the amendments the autonomy of merger ratios among listed affiliates and the obligation to disclose corporate value evaluation results in the event of a merger. On this day, the Ministry of Justice announced, “Although we are pursuing revisions to the Commercial Act and the Capital Markets Act, nothing has yet been decided regarding the content and timing of announcement.”

It is known that there is some confusion within the Ministry of Justice regarding this amendment. This is because not only has a committee made up of external experts not been formed, but the opinions of actual stakeholders such as businesspeople have only just begun to be heard.

There are many outside opinions. A professor at a law school pointed out, “There is no social discussion about the extent of legitimate interests among the amendments that strive to protect (shareholders’) legitimate interests.” He added, “If the commercial law revision is pushed forward without agreement on, for example, whether it is a legitimate benefit if only the procedural aspects are met, there is bound to be controversy.”

Bang In-tae, an attorney at Daeryun Law Firm, also said, “As minority shareholders can file lawsuits directly against management, the shareholder representative lawsuit system under Article 403 of the Commercial Act may also become a thing of the past. This increased burden on management not only increases corporate costs, but there is also a risk that internal information related to the company’s core competitiveness may be disclosed to the outside world.”

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