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DP railroads Commercial Act revision on corporate reform through parliament

Published: 25 Aug. 2025, 11:51 Updated: 25 Aug. 2025, 17:22

A revision to the Commercial Act passes in the main hall of the National Assembly in Yeouido, western Seoul, on Aug. 25. [YONHAP]

The National Assembly on Monday passed another revision to the Commercial Act aimed at better protecting minority shareholders after the conservative People Power Party's (PPP) filibuster came to an end.

The revision, pushed by the liberal Democratic Party (DP), passed with 180 votes in favor and two abstentions by lawmakers of the Reform Party during a plenary session boycotted by the PPP.

The latest revision mandates the adoption of a cumulative voting system at large listed companies with assets over 2 trillion won ($1.45 billion) and expands the separate nomination of audit committee members from one to at least two.

Such provisions were excluded from an earlier revision of the Commercial Act passed by the National Assembly last month with bipartisan support.

The PPP launched a 24-hour filibuster Sunday morning in opposition to the latest revision, voicing concerns over inefficient corporate governance and a negative impact on the competitiveness of companies.

Cumulative voting allows shareholders to cast multiple votes proportionate to their stakes when electing board members, a move intended to better protect the interests of small shareholders.

The revision reflects President Lee Jae Myung's pledge to improve corporate governance as part of efforts to eliminate the so-called Korea discount, a phenomenon resulting in the undervaluation of local stocks.

In early July, the Assembly passed a revision to the Commercial Act that would expand the fiduciary duty of corporate board members to all shareholders.

The latest move also comes after the DP-dominated parliament passed a series of contentious bills this month, including broadcasting bills that revamp the governance of public broadcasters and the so-called Yellow Envelope Bill, designed to guarantee the bargaining rights of indirectly employed subcontracted workers.

Yonhap