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The amendment to the Commercial Act, which expands directors’ duty of loyalty to shareholders, has passed the National Assembly’s plenary session. Whether Acting President Han will exercise a veto has drawn attention amid heightened political debate over the bill.
On March 13, the amendment to the Commercial Act, which introduces directors’ duty of loyalty to shareholders, was passed in the plenary session of the National Assembly, backed by the opposition party.
That afternoon, the bill was put to a vote and passed with 184 votes in favor, 91 against, and four abstentions, out of 279 members present. The amendment will take effect one year after its promulgation.
The amendment, proposed by the Democratic Party of Korea in line with its official policy stance, extends directors’ duty of loyalty from “the company” to “the company and its shareholders.” It also mandates the adoption of electronic shareholder meetings for listed companies.
While the Democratic Party of Korea has argued that the Commercial Act should be revised to improve stock market’s transparency, the People Power Party has opposed the bill, claiming it would impose excessive burdens on companies.
Following the amendment’s passage in the plenary session, the business community expressed concerns, warning that a surge in shareholder lawsuits and aggressive actions by foreign hedge funds could hinder corporate management and push the Korean economy toward crisis. The People Power Party promptly proposed exercising a veto (right to request reconsideration) on the amendment.
As the impeachment of Acting President and Prime Minister Han Duck-soo was dismissed, the authority to decide whether to exercise a veto on the amendment now rests with Acting President Han. The amendment, which passed the plenary session of the National Assembly, was sent to the government on March 21. The government may either promulgate the amendment or exercise its veto power.
As the first-ever Korean law firm to issue specialized legislative journals, DR & AJU Public Sector Relations Group has been publishing the monthly Policy & Business Report since August 2019. The March 2025 issue of the P&B Report conducted a full inspection of legislation proposed to the National Assembly Subcommittee, Standing Committee, and Plenary Session from the opening of the 22nd National Assembly on February 15, 2025, to March 14, 2025, and selected and analyzed legislation with significant impact on corporate activities. In the case of major legislation, key mentions of legislators, members of the Standing Committee, and government officials are included.
*DR & AJU Public Sector Relations Group provides P&B Report subscription services. Please contact us at Ic@draju.com for further inquiries.
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