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Assembly committee passes bill to weaken corporate dominance by top shareholders

All News 19:31 December 08, 2020

SEOUL, Dec. 8 (Yonhap) -- A South Korean parliamentary committee on Tuesday passed a controversial bill that would require listed companies to name at least one auditor from outside their board and limit the voting powers of the biggest shareholders and their families to 3 percent in the auditor's appointment.

The proposed revision to the Commercial Act was passed by the Legislation and Judiciary Committee of the National Assembly, where the ruling Democratic Party (DP) holds a majority. The main opposition People Power Party boycotted the vote.

Businesses have strongly opposed the revision, claiming that the move will hurt shareholders' rights and that speculators can take advantage of the rule.

People Power Party lawmakers on the Legislation and Judiciary Committee encircle committee chairman Rep. Yun Ho-jung as he is about to pass a bill on revising a commercial law at the National Assembly in Seoul on Dec. 8, 2020. (Yonhap)

In consideration of such concerns, the bill was changed to ease the limitation. The original bill required the combined voting power of the top shareholder and affiliated people to be limited to 3 percent but the final version allows them to cast the 3-percent vote separately.

The revised bill will also pave the way for a shareholder of a parent company to file a derivative suit against the board members of an affiliate firm. The shareholder will need to have a stake of 0.5 percent or more for listed firms. The figure stands at 1 percent for non-listed firms.

The main opposition did not participate in the vote, as the ruling party passed the bill to revise the act on the Corruption Investigation Office for High-ranking Officials (CIO) earlier in the day.

The installation of the CIO is a core part of President Moon Jae-in's determined drive to reform the country's powerful institutions, especially the state prosecution service, which has often been accused of abusing its power to prosecute as well as investigate cases.

colin@yna.co.kr
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