Collective Lawsuit Bill for Securities Passes in Plenary Meeting

Enterprises with assets of more than two hundred million won and enterprises with assets less than that amount will be the object of collective lawsuits from the date of January 1, 2005 and January 1, 2007 respectively.

The National Assembly held its plenary meeting on December 22 and passed the collective lawsuit bill, which allows small stockholders who have been victimized by partial auditing or stock price fabrication by companies to file suit against the responsible companies.

The collective lawsuit system is intended to clarify the companies’ auditing and protect small stockholders. The system allows that if some of the small stockholders win a suit against an enterprise, the decision affects all other small stockholders.

According to the bill, the collective lawsuits can be entered into action under the condition that the group of the victims number more than 50 and this group of people holds more than 0.01 percent of the company’s issued stocks.

The bill specifies that, if any defendant or any process attorney for the plaintiff receives or requests a bribe in exchange for a corrupt favor related to the suit, the offender can be sentenced to as much as a life term, or more than 10 years in prison. The National Assembly has also changed the deadline of taxation for the Agricultural and Fishing Community Special Tax from the previous date of June 30, 2004 to June 30, 2014, extending it by 10 years. The Assembly passed total of 34 bills, including a reform to the Child Welfare Law which allows for the punishment of persons who habitually harass children by cumulatively adding an additional half of the determined sentence to their term. The Special Law Regarding Appointment of the Unappointed National Teachers’ Colleges Graduates was also passed the same day, enabling graduates of national teachers’ colleges before October 7, 1990 to be appointed as elementary and middle school teachers through appropriate methods such as enrolling in a college of education. The teacher candidates were scheduled to be appointed as teachers after graduation, but that did not occur because of a decision by Constitutional Court of Korea that ruled the Educational Officials Law to be unconstitutional on October 8 of that year.

Hyung-gwon Pu bookum90@donga.com