South Korea's Cabinet on Tuesday approved a revision bill of the Commercial Act to require boardrooms to fulfill a fiduciary duty to company shareholders, which the liberal government regards as a long-awaited move to tackle the chronic undervaluation of the South Korean market.
So far, boards of directors have had the obligation to act solely in the company's interests, not shareholders.
The new bill is to take effect immediately after the promulgation of the law, according to President Lee Jae Myung's office.
The revision of the Commercial Act focuses on requiring that one-third of a company’s board be made up of outside directors. It also proposes limiting the largest shareholder’s voting rights to 3 percent when appointing or dismissing members of the audit committee — whether they are outside directors or not — starting one year after the bill’s promulgation.
The revision bill also suggests that holding an electronic vote through a virtual shareholders meeting, simultaneously with in-person voting, will become mandatory for all listed companies starting January 2027.
It is the first set of laws passed by the parliament through a bipartisan agreement on July 3.
The Cabinet also approved a revision bill to impose a new set of restrictions regarding the South Korean president's power to declare martial law, in order to prevent abuse.
The bill indicates that the Cabinet is required to create meeting minutes and submit them to the National Assembly if a South Korean president intends to declare martial law and asks for parliamentary approval.
Any act of hindering a lawmaker or a civil servant from entering the National Assembly could be subject to an imprisonment of up to five years. No soldiers or police officers are allowed to enter the National Assembly while martial law is in effect, according to the bill, adding that violators face up to three years of imprisonment.
A separate revision of the Immigration Act provided legal grounds for hiring temporary foreign workers in seasons of high demand for manual labor in the agricultural and marine sectors through a seasonal worker program in South Korea.
The bill mandates that the central government, local governments or institutions authorized to do so will only be eligible to recruit foreign workers as seasonal workers, while violators could find themselves behind bars for up to three years.
South Korea has been operating a seasonal worker program that began with its first pilot in 2015. This year, the country is expected to hire nearly 100,000 seasonal workers, and the seasonal workers' rights are to be protected under a legal framework six months after the bill is promulgated.
In total, 13 bills were passed at Tuesday's Cabinet meeting.
During the meeting, Lee urged the government to slash next year's budget in certain areas where public funds are being spent "customarily, inefficiently and wastefully."
Lee also thanked medical students for their decision to return to class on Saturday.
"I'm asking the education authorities to swiftly take necessary measures in a follow-up (to their decision). I'm also asking medical students to contemplate their responsibilities of caring about people's health and lives," said Lee, who presided over the Cabinet meeting at his office in Seoul on Tuesday.
"The society we live in lacks dialogue. We cannot lay blame on someone, but from now on, I hope every corner of society can engage more actively in dialogue."
consnow@heraldcorp.com
