Legislation Subcommittee Continues Review of Third Commercial Act Amendment... "To Be Passed Between Late February and Early March"

On February 3, the National Assembly's Legislation and Judiciary Committee convened its First Subcommittee on Bill Review and began deliberations on the third amendment to the Commercial Act, the core of which is the mandatory cancellation of treasury shares. The ruling Democratic Party of Korea expressed its intention to pass the amendment to the Commercial Act by early March at the latest.

Representative Kim Yongmin, the Democratic Party's secretary on the Legislation and Judiciary Committee, said after the subcommittee meeting that "lawmakers from the People Power Party basically want to hold a public hearing," but added, "Even within the People Power Party, some lawmakers are in favor and some are opposed."

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Representative Kim said, "There is a consensus that treasury shares are currently being abused in the capital market in ways that deviate from their original purpose and intent, so there is a need to stop this," and added, "They seem to agree on measures such as restricting the disposal of treasury shares or creating new procedures for disposal, but there are some differing views on whether we should go as far as requiring cancellation."

He went on to say, "We decided to continue discussions on whether to hold a public hearing, taking into account the schedule of the Legislation and Judiciary Committee."

Regarding the timetable for handling the third amendment to the Commercial Act, Representative Kim said, "I think the effective deadline for passing bills in the current National Assembly is from late February to early March. We will definitely handle the Commercial Act by that deadline." He then added, "Even if we hold a public hearing, we will hold it within that period and process the bill within that timeframe."

However, Representative Kim also said, "Depending on the circumstances, we may first deal with the prosecution reform bill and then handle the amendment to the Commercial Act afterward," while reaffirming, "At the very least, our position is to pass the Commercial Act by early March."

On the bill proposed by People Power Party lawmaker Kim Jaeseop, which would exempt involuntarily acquired treasury shares from the mandatory cancellation requirement, Representative Kim said, "In practice, many decisions are made at the general meeting of shareholders, but this is not clearly stipulated in law. There was an opinion that, since cancellation would be carried out by a board resolution, it would be acceptable to treat involuntarily acquired treasury shares in the same way as voluntarily acquired ones," adding, "The courts and the Ministry of Justice also agree with that view, that cancellation can be done by a board resolution."

As deliberations on the third amendment to the Commercial Act only began on this day, it is unlikely to be introduced at the plenary session of the National Assembly scheduled for February 5.

Meanwhile, at the subcommittee meeting of the Legislation and Judiciary Committee on the same day, lawmakers passed several bills, including amendments to the Court Organization Act and the Act on the Establishment and Jurisdiction of Various Levels of Courts, which provide for the establishment of specialized maritime courts (maritime courts) in Incheon and Busan; amendments to the Deposit Act and the Act on the Establishment of Various Levels of Courts, which create a legal basis for designating banks to hold court deposits in addition to deposited property; and an amendment to the Civil Act that strips all heirs, including children and spouses who have engaged in heinous or immoral conduct, of their right to claim a reserved portion of an inheritance.

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