Top conglomerate executives rebuke Commercial Act revisions as threat to global competitiveness

Home > Business > Industry

Top conglomerate executives rebuke Commercial Act revisions as threat to global competitiveness

Published: 21 Nov. 2024, 17:59

JIN EUN-SOO
[email protected]

Audio report: written by reporters, read by AI

Top executives of major Korean conglomerates gather to issue a statement opposing revisions to the Commercial Act on Thursday. [FEDERATION OF KOREAN INDUSTRIES]

Top executives from major conglomerates in Korea collectively opposed proposed amendments to the Commercial Act, claiming that they undermine corporate values and competitiveness.

Samsung Electronics President Park Seung-hee, SK Group President Lee Hyung-hee and Hyundai Motor Executive Vice President Kim Dong-wook were among 16 executives who gathered Thursday morning to issue the joint statement in a rare collective move indicating the urgency of the matter.

"We request that the National Assembly take more care of policies and budgets aimed at reviving Korea's economy instead of making revisions to the Commercial Act and legislating regulations," the statement read.

"If the amendments pass, multiple companies will suffer lawsuits and attacks from foreign speculative funds, making it difficult to ensure normal operation of the boards and hindering efforts to discover new growth engines. Ultimately, this could significantly undermine corporate competitiveness, leading to a devaluation of Korean stocks."

The Democratic Party has been pushing for revisions to Korea’s Commercial Act aimed at expanding the responsibilities of board members, prioritizing shareholder rights and improving corporate governance.

One revision would obligate the board to protect the interests of all shareholders and treat them fairly, which is intended to penalize board members if certain business decisions are made for the sake of protecting the interests of the owners, known as chaebols in Korea.

Such proposed revisions have received much backlash from Korea's business circle, which claims that it erodes normal business management across the board.

"There is a need to revamp the system in order to prevent unintentional harm against minority shareholders that could arise in the process of restructuring a business for efficiency," the statement said.

"But an alternative approach is advised, such as revising the Capital Market Act."

The chief executives' request comes at a time of maximized uncertainty with a new U.S. administration set to take office amid slow economic growth internally.

"We request that the government expedite supportive measures while other countries are waging full-fledged wars in advanced industries in the face of protectionism and not miss a golden opportunity," it said.

The leaders promised to leap forward more aggressively.

"We will try to find new businesses and create more jobs regardless of external or internal factors," their statement said.

"We will focus on pioneering new markets and innovating technology in order to raise our competitiveness in exports and reignite the growth engines of Korea's economy."

BY JIN EUN-SOO [[email protected]]