Business law revision hurts firms fighting hostile funds
Posted : 2020-12-22 13:52
By Nam Hyun-woo
A revision to the country's Commercial Act is raising fears that it may end up preventing local firms from defending their management rights against hostile investors, according to industry officials and experts.
They cited a U.S. private investment fund's recent opposition to LG Group's plan to spin off some units as a case that may have become worse since the revision, and many Korean firms having activist funds as shareholders will face similar opposition to their decision-making procedures.
On Dec. 9, the National Assembly passed a number of revisions to the act, aimed at requiring companies to appoint more than one audit committee member from outside the board of directors, decided upon by shareholders. In this process, the respective voting rights of a company's owner and their affiliated persons and organizations ― the largest shareholders ― will be limited to 3 percent no matter how big of a stake they possess in the company.