[EDITORIALS]Don’t add business burdenThe government laid out proposals to amend commercial laws, and they are mostly in line with the Justice Ministry’s draft in June. Since the draft would restrict corporate activities but not protect management, local businesses asked the government to review the draft, but their requests were not heeded.
The proposals include measures such as the double derivative lawsuit, which would allow a shareholder of a company to file a lawsuit in a corporate malfeasance case involving the company’s affiliate. But they do not have a shield like the “golden share” system, which permits the government or another party to veto takeovers with a single share when a takeover has serious problems or is not deemed in the national interest.
The Korea Chamber of Commerce and Industry said it is unfortunate the government pushed for the double derivative lawsuit, which has not been enacted in other countries, but overlooked measures to help protect local companies from hostile takeover attempts. This administration probably has no idea that Korean companies are always nervous about prospects of lawsuits against them and about hostile merger bids.
The business advocates are most concerned about the double derivative lawsuit, which would only encourage more lawsuits. There is also a study that of 540 non-listed affiliates under the nation’s top 30 business conglomerates, 264 would be vulnerable to such cases.
Under this system, a shareholder of a parent company would meddle with the management of an affiliate. Then, executives of the affiliate would end up working harder for their parent company than for their own. This is why Japan decided not to enact this system after much discussion.
With its lame measures from late last month designed to help businesses, along with yesterday’s proposals, the government has ignored four major issues for business: relaxing regulations on plant construction in metropolitan Seoul, loosening corporate investment caps, introducing protective measures against hostile takeovers and reviewing double derivative lawsuits.
It is difficult to know whether the government really wants to create a business-friendly environment, as it has stressed for so long, or if it is intent on clamping down on businesses.
Local companies are already dealing with a weak dollar, high raw material costs, a sluggish global economy and rising interest rates. The last thing they need is more restriction and taxation from the government.
with the Korea JoongAng Daily
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