The corporate governance amendments to the Korean Commercial Code (the "KCC Amendments") were approved by a plenary session of the National Assembly in December 2020.  For an overview of the KCC Amendments (including those related to multi-level derivative suits, separate elections of directors who also serve on the audit committee and clarification of the applicability of special provisions related to minority shareholders' rights), please refer to our previous newsletter.  Below is a summary of key issues that have been raised thus far and the legislative history of the KCC Amendments to date. 
 

• 1^st Subcommittee of the Legislation and Judiciary Committee 

The KCC Amendments were first directly referred to the 1^st subcommittee of the Legislation and Judiciary Committee on November 16, 2020 and then submitted to the 1^st subcommittee for article-by-article deliberation on each of November 17 and November 25, 2020. 

The KCC amendments created much debate during the deliberation process at the National Assembly and preliminary hearings, particularly to the provisions relating to multi-level derivative suits and separate elections of directors who also serve as audit committee members.  For example, with respect to the director election matter, those supporting the idea cited the laws of foreign jurisdictions such as corporate laws of Israel and Italy that restrict the voting power of large shareholders, while those with an opposing view countered that these examples were not germane to the specific issue at hand. 
 

• Amendment by the Agenda Coordination Committee 

Following the review by the Judiciary Committee, the KCC Amendments were then referred to the Agenda Coordination Committee at the plenary session of the National Policy Committee (Financial Group Supervision Act and the Fair Trade Law) and the Legislation and Judiciary Committee (Korean Commercial Code) held on December 7, 2020, and a substitute proposal was submitted at a meeting held by the Agenda Coordination Committee on the morning of December 8, 2020. 

The Agenda Coordination Committee revised the KCC Amendments so as not to apply the original proposal restricting the combined voting rights of the largest shareholder and related parties to 3% or less when appointing an outside director as an audit committee member (however, the application of the 3% cap to individual shareholders when appointing an audit committee member who is a non-outside director was maintained).  In addition, the threshold for multi-level derivative suits by shareholders of listed companies was increased to 0.5% from the initial proposal of 0.01%.  The table below shows in detail changes passed by the Agenda Coordination Committee at the plenary session.