Since the opening of the Korean capital market back in 1997, debates as to the introduction of measures for protecting corporate management rights have repeatedly emerged and subsided in Korean society.
During the crisis of the SK Group in 2003 that resulted from Sovereign Asset Management and the disputes between KT&G and Carl Icahn in 2006, the business community tried to make a variety of such measures law, including the “poison pill,” “golden shares,” and disproportionate voting shares, but civic organizations blocked the way every time. Politicians sided with civic organizations to win votes, and the deep-rooted anti-conglomerate sentiment has never been overcome.
The same things are being repeated as of late with regard to the Samsung Group and Elliott Management. At present, reform of the system in favor of enterprises is being discussed in the political community. United Democratic Party of New Politics (UDPNP) lawmaker Park Young-sun proposed an amendment to the Foreign Investment Promotion Act to limit foreign investment in certain cases, and ruling Saenuri Party lawmaker Jung Kap-yun is planning to table a bill for the measures, including the “poison pill.”
The problem is that the revision of laws against enterprises is underway at the same time. For example, UDPNP lawmaker Kim Ki-joon proposed an amendment to the Commercial Code last month so that the largest shareholders and affiliated persons cannot become members of committees for the recommendation of outside director candidates. Although the idea is to ensure the independence of such committees, it could end up putting a limit on the largest shareholders’ rights and allowing foreign funds to raise their voices.
“It is none other than we that take a hit with lawmakers themselves, having yet to determine the direction of their policy,” an entrepreneur criticized, adding, “The legislations are necessary not to protect the vested rights of chaebols, but to protect them and the national economy from foreign speculative funds.”