Korean businesses oppose amendment to commercial act

Against the Justice Ministry’s bill for an amendment to Commercial Act, 19 economic groups of small and large companies across industries called for a full retraction of the bill, insisting that the amendment restricts normal business activities.

The 19 economic groups, including the Federation of Korean Industries, the Korea Chamber of Commerce & Industry and the Korea Federation of Small and Medium Business, held a news conference Thursday at KT Building in Yeouido, Seoul to announce a 20-page joint proposal. After the press conference, the group handed the proposal to the Justice Ministry.

Other than economic groups representing small, medium, large and listed companies, groups representing most or industries participated in the joint proposal, including banking, insurance, construction, semiconductor, petrochemical, textile, cement and car industries. Among them were 140,000 member companies of the Korea Chamber of Commerce & Industry and 650,000 companies of the Federation of Korean Industries.

In the proposal, companies called for cancellation of major poison pill clauses such as appointment of auditors separately from other members of board of directors and determining the number of voting right based on the number of appointed members of board of directors, not the number of stocks. According to the proposal, companies freely select their own governing structures to maximize their values, and, therefore, company governing structures should not be unified.

The poison pill clauses in the amendment will not only particularly jeopardize holding companies with simple governing structures but also give foreign speculation funds a wing by threatening the management of domestic companies. Other economic ministries, including the Strategy and Finance Ministry, also opposed the bill, saying, “The amendment bill to Commercial Act does not reflect the reality and does not fill the purpose of the bill to invigorate the economy.”

Park Chan-ho, an executive director of the Federation of Korean Industries, said in the news conference that implementing the bill forcing a unified governing structure will be like forcing people to wear one-size clothes with the same design.

The joint-proposal by the economic groups will likely serve as a trigger for review of bills that regulate economic activities, which have been submitted by the government and handled at the National Assembly. During the first half of this year such bills targeted only certain conglomerates to limit cross-subsidiary shareholdings and to ban placing orders with subsidiaries. However, the government’s regulatory move now aims at all companies, inviting criticism from businesses concerned about losing competitiveness.

Companies also oppose an act on registration and evaluation of chemicals enacted in May. After hearing problems of the act from businesses in province, Gyeonggi Governor Kim Moon-soo called for an amendment, and other local governments followed suit.

Companies are moving faster regarding the expansion of ordinary wage. Along with a group of chairmen of the 71 chambers of commerce across the country, the Korea Chamber of Commerce and Industry submitted a proposal to the government, the National Assembly and the Supreme Court asking for a solution to the issue.