The Democratic Party of Korea has raised concerns that minority shareholders continue to suffer damages due to corporate loopholes, even after the implementation of the third revision to the Commercial Act, which made treasury share cancellation mandatory. Party members also argued that the stock price suppression prevention bill, whose necessity was mentioned by President Lee Jae-myung, should apply diverse criteria.
Rep. Lee Jung-moon of the Democratic Party held a forum titled "Remaining Tasks for Shareholder Protection After the Commercial Act Revision — Preventing Stock Price Suppression and Blocking Intentional Delistings" at the National Assembly Members' Office Building on Tuesday. "As revealed in the Daedong Electronics case, the issue of companies deliberately inducing delisting is an urgent task that must be resolved to protect minority shareholders," Lee said.
To prevent this, experts proposed measures including: establishing liability provisions for companies and executives regarding damages to minority shareholders caused by failure to obtain audit opinions, along with restrictions on relisting; unifying the means of squeezing out minority shareholders; and improving the controlling shareholder's right to demand share sales. "Despite the Commercial Act revision, major shareholders are using loopholes to swiftly squeeze out minority shareholders by exercising the controlling shareholder's right to demand share sales," said Kim Kwang-joong, an attorney at law firm Class Hankyul.
Lee also stated that while the Democratic Party has been introducing stock price suppression prevention bills based on the price-to-book ratio (PBR), bills based on indicators such as free-float ratios and trading volumes are also needed. Lee is preparing legislation along these lines. Referring to Rep. Lee So-young's "Stock Price Suppression Prevention Act" and Rep. Kim Hyun-jung's "Stock Price Normalization Act," he said, "Through the National Policy Committee, we will continue the upward trajectory of stock prices via revisions to the Capital Markets Act and other measures."
Lee led the first and second revisions to the Commercial Act while serving as the senior deputy chairman of the party's Policy Committee through last year, including during the presidential election period. He currently serves as chairman of the party's Digital Asset Task Force, focusing on efforts such as enacting the Framework Act on Digital Assets.
