Lee Jae-myung was elected as the 21st president of Korea through the June 3, 2025 election and sworn in the following day, marking the start of a new administration. The market and corporate sector are showing great interest in the new administration’s policies aimed at enhancing corporate governance and systems related to corporate law, as well as in the content and timeline of related amendments to the Korean Commercial Code (the “KCC”).
As noted in our previous newsletter, the Democratic Party of Korea (the “DPK”), the ruling party as a result of the election, proposed recovery, growth, and happiness as its three visions. Specifically regarding growth, it introduced a number of campaign pledges on corporate law and governance under the sections of its pledge booklet titled “Building a Foundation of Growth” and “Fair Economy” (Link).
In furtherance of such pledges, the DPK’s Stock Market Revitalization Task Force held a press conference earlier on June 5, shortly after the president’s inauguration, and announced its stance on the amendment to the KCC.
At the press conference, the DPK stated that the upcoming bill to amend the KCC would essentially be the same as the one introduced last November by DPK Assembly Member Lee Jungmun (which was integrated into an alternative bill by the National Assembly’s Legislation and Judiciary Committee and passed at the National Assembly plenary session but vetoed by the previous administration (Link)), which we discussed in a previous newsletter. According to the DPK, the bill will cover directors’ fiduciary duty to protect shareholders and virtual general meetings of shareholders, among other things.
With respect to the timing of enforcement, in order to expedite shareholder protection, all parts other than those concerning virtual general meetings of shareholders will take effect from the date of promulgation by the president.
Additionally, the bill is said to include a proposed amendment to the 3% rule (which would amend the application method and the calculation of voting rights for the 3% rule limiting the voting rights of the largest shareholders and related parties to 3% when appointing statutory auditors or members of the audit committee within the board of directors). Once again, the DPK stressed that President Lee Jae-myung had expressed the need to improve the existing bill to amend the KCC which had been passed by the National Assembly during his candidacy, and that the legislative process should take less than a month.
During a follow-up briefing held after the press conference, the DPK mentioned that a separate bill to amend the Capital Markets Act had been submitted and was awaiting review. Such bill is said to not cover the cancellation of treasury stocks.
The bill to amend the KCC was submitted to the National Assembly following the June 5 press conference and the legislative process has been initiated. Once the bill is passed, the new administration’s policies aimed at enhancing corporate governance and systems related to corporate law may significantly impact companies’ corporate restructuring, investments, strategic planning, financial capabilities, investor relations decisions, etc. Companies currently reviewing such key transactions as well as associated stakeholders may want to closely monitor related developments.
