Pre-Approval by Court for Class Action

The investors who have suffered loss by the false official publication must obtain an approval from the court before they file a class action lawsuit against the companies. The government decided the plan for the class action lawsuit to deliver to the National Assembly to pass the law during the general session.

Kim Jin-Pyo, the vice Minister of Finance and Economy, announced this at the press conference after the Finance Policy Committee held in the Bank Conference Hall, Myong-Dong, yesterday.

Vice Minister Kim said, ``the business activities could be affected by the overuse of the class action. To minimize the side-effect, (the Ministry) had set a measure for the investors to obtain a pre-approval before they file a class action lawsuit.`` He also said that ``the government is considering to limit the cases of the class action to the false official notice, the stock price manipulation, and the window dressing accounting.``

With the conditions, the government expects that the class action lawsuit will not be overused after the introduction of the new system. The government has made this supplementary measure due to the protest of the business circle.

However, some experts indicated that the strict limitation might weaken the effect of the class action lawsuit by the investors.

Meanwhile, the economic policy committee of the ruling and opposing parties and the government agreed to introduce the class action lawsuit step by step and to establish a systematic device to prevent the overuse of the class action that might shrink the business activities on Aug 9 and 10.

yhchoi65@donga.com