Kim Sang-hoon, “Different stakeholders with varying interests… Defining it as a ‘duty of loyalty’ is a logical contradiction.” Amendments to the Capital Markets Act are expected to alleviate unfair practices in the stock market.
The People Power Party (PPP) has expressed opposition to the Democratic Party’s (DP) intention to amend the Commercial Act by extending the duty of loyalty to include general shareholders, alongside accepting the abolition of the financial investment income tax.
On November 5th, Kim Sang-hoon, the policy chief of the PPP, stated during a parliamentary strategy meeting, “The duty of loyalty for shareholders under the Commercial Act carries a significant logical contradiction,” pointing out that “company shareholders include foreign investors, institutional investors, private equity funds, and small shareholders with different interests. Defining a duty of loyalty for these diverse interests is itself a logical contradiction.”
Kim added that “the duty of loyalty under the Commercial Act provides ample room for corporate management control to be compromised by aggressive hedge funds like private equity funds.”
He added, “If the intent of the proposed amendment is for corporate value enhancement, we will seek wise alternatives together with the opposition,” and “we will also discuss whether there are alternatives under the Capital Markets Act.”
The PPP anticipates that amendments to the Capital Markets Act could also have the effect of reducing unfair practices in the stock market.
Meanwhile, the DP is pushing a Commercial Act amendment aimed at guaranteeing the interests of minority shareholders and intends to handle this along with the financial investment income tax abolition bill.
On November 4th, Lee Jae-myung, the head of the DP, mentioned at the party’s supreme council meeting, “Currently, the stock market in Korea is very difficult. We have agreed to the government’s and ruling party’s proposal to abolish the financial investment income tax.” He emphasized, “We will focus all efforts on legislation, including the Commercial Act amendment, and on policies for stock market advancement so that the stock market can become a national investment means.”
Political analysts interpret this as an attempt by Lee to expand the party’s centrist appeal by agreeing to the tax abolition while also appeasing DP supporters who oppose the tax repeal through the proposed Commercial Act amendment.