By Yoon Ja-young
Staff Reporter
Minority shareholders will have a greater say in corporate management as the government plans to revise the commercial code to further empower their voting rights.
The Ministry of Justice said it will hand in revision bills for the special provisions of the commercial code on listed companies to the National Assembly in September, after public hearings and deliberation at the Ministry of Government Legislation.
The revision bill will make it easier for smaller shareholders to convene shareholders meetings, call for the dismissal of executives and have a greater say in other management issues.
Currently, if minority shareholders of a listed company with less than 100 billion won capital wish to call for a general meeting of shareholders, they must have at least a 3 percent stake in the firm. The revision bill cuts the requirement to 1.5 percent, facilitating minority shareholders' convening such a meeting.
For shareholders of bigger firms with capital exceeding 100 billion won, meanwhile, the ministry decided to keep the current requirement of a 1.5-percent stake.
To prevent abuse of the right, however, only people who have held stocks for over six months will be entitled to such minority shareholders' rights.
The revision bill eases other requirements. A 0.25 percent stake would suffice for minority shareholders of medium sized firms to request the company to dismiss a director or an auditor. Currently, they should have 0.5 percent stake.
Shareholders can also propose issues to be discussed at the shareholders' meeting, or to see the company's books.
Minority shareholders will have more power in choosing audit inspectors of the firm, who will be selected in the general meeting of shareholders, along with other directors.
``It is expected to complement the corporation law and improve corporate governance structure by strengthening minority shareholders' rights,'' an official at the ministry said.
However, NGOs are criticizing the ministry for giving up the introduction of the double derivative lawsuit, one of the most controversial issues in the commercial code revision. If introduced, the lawsuit, which allows shareholders of a parent company to sue directors of unlisted subsidiaries despite their lack of direct ownership in them, was expected to protect shareholders' rights effectively, discouraging conglomerates from engaging in unlawful activities through their subsidiaries.