Home > National > Politics

'3% rule' amendment to Commercial Act gets bipartisan passage out of subcommittee

Published: 02 Jul. 2025, 18:29 Updated: 02 Jul. 2025, 18:40

The Legislation and Judiciary Committee of the National Assembly subcommittee meeting is held on July 2 in western Seoul. [NEWS1]

A proposed amendment to the Commercial Act, including the so-called 3 percent rule, passed the first subcommittee on bill review under the Legislation and Judiciary Committee of the National Assembly on Wednesday.

Lawmakers from both ruling and opposition parties convened at 4 p.m. to deliberate and approve the amendment, which includes a revised version of the rule — a key point of contention.

The 3 percent rule stipulates that, when appointing audit committee members at listed companies, the voting rights of the largest shareholder and related parties will be capped at 3 percent. The rule is intended to prevent undue influence and abuse of control by majority shareholders.

Lawmakers from both parties agreed to pass the amendment on the condition that further refinements will be made, and they plan to bring it to a floor vote at the plenary session on Thursday.

Earlier on Wednesday, the Democratic Party (DP) and the People Power Party (PPP) reviewed the bill at the subcommittee level, but discussions stalled over differing views on the 3 percent rule and cumulative voting.

In the afternoon, the floor leaders and judiciary committee secretaries from both parties reached a consensus on the revised 3 percent rule in a meeting and agreed to move forward with the legislation.

The Legislation and Judiciary Committee of the National Assembly subcommittee meeting is held on July 2 in western Seoul. [NEWS1]

“The amendment to the Commercial Act has just passed out of the subcommittee of the judiciary committee,” said Rep. Kim Yong-min of the DP, who serves as the ruling party’s secretary of the committee and chair of the bill review subcommittee.

“An agreement was reached to apply the 3 percent rule to the separate election of outside directors who serve as audit committee members,” Kim told reporters after the meeting. "This marks the first piece of livelihood legislation to pass under the Lee Jae Myung administration, and the fact that it was a bipartisan agreement makes it all the more meaningful."

“A bipartisan agreement on the Commercial Act sends a positive message to the market," said Rep. Jang Dong-hyeok of the PPP, the committee’s opposition secretary. "Even though there were disagreements, we managed to reach a consensus on the rest and pass the bill through the subcommittee.”

However, proposals to expand the number of separately elected audit committee members from one to two or even all members — and to adopt cumulative voting — were excluded from the current amendment. These provisions will be addressed in the future after public hearings and further discussion.

“We will continue to lay the groundwork to better protect shareholder interests and enhance corporate transparency. We’ll do our utmost to ensure that fair and transparent rules are applied to stabilize the capital market. As for the two unresolved issues, we will hold public hearings soon and aim to process them as quickly as possible," Rep. Kim said.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY BAE JAE-SUNG [[email protected]]