Government unveils amendment to Capital Markets Act... "Specifies protection of shareholder interests"

As the business community's opposition to the amendment to the Commercial Act, which imposes shareholder loyalty obligations on corporate boards, has grown, the government has proposed a plan to revise the Capital Markets Act as an alternative.

The Financial Services Commission, the Ministry of Justice, and the Financial Supervisory Service held a joint briefing today (2nd) and announced the direction of the revision of the Capital Markets Act to strengthen the protection of general shareholders' interests.

First of all, when listed corporations engage in activities stipulated in the Capital Markets Act, such as mergers and divisions, comprehensive transfer or exchange of stocks, the board of directors' efforts to protect shareholders were specified.

To this end, the board of directors decided to jointly create shareholder protection guidelines, including writing and disclosing opinions on the purpose of the merger, expected effects, and appropriateness of value.

In addition, when merging, the existing value calculation criteria were excluded, and stock prices, asset values, and profit values were comprehensively considered.

In addition, when a subsidiary is listed after a physical division, it introduces a basis for preferential allocation within 20% of the IPO shares to parent company shareholders.

As in the case of LG Energy Solution and Doosan Bobcat, which were controversial, they have started to prepare protection measures in consideration of the fact that minority shareholders may be alienated from physical division or mergers and acquisitions.

In addition, when merging, external professional evaluation agencies must be evaluated and disclosed.

Kim Byung-hwan, chairman of the Financial Services Commission, explained that the revision of the Capital Markets Act was applied only to listed corporations, minimizing the negative impact of the revision of the commercial law targeting unlisted and small and medium-sized companies.

It also emphasized that by specifying the applicable behavior, the uncertainty of daily management activities caused by the revision of the commercial law of a general corporation can be resolved.

He added that the revision of the Capital Markets Act will be submitted to the National Assembly within this week through legislative legislation in consultation with the ruling party.