SEOUL, Jul. 20 (Korea Bizwire) — The South Korean government has decided to create a special task force that will report directly to the president to deal with heavy-handed practices committed by large corporations to the detriment of medium and small-sized businesses.
The establishment of the “Euljiro Committee”, and the decision for President Moon to be directly involved, are both seen as a strong statement by the current administration that it will take economic fair play very seriously.
Korea’s large corporations are thought by many to engage in overly demanding behavior with regards to their smaller-sized partners, who mostly go along as they lack the wherewithal to oppose their much more powerful counterparts.
A new set of laws will be introduced to rein in the actions of the families of conglomerate owners. Under the new laws, shareholders will be able to sue affiliates and the management of their subsidiaries for damages if they are found to have committed criminal activities.
Appropriation of protected technology and predatory pricing are two practices that will be targeted for improved oversight. In addition, legal provisions will be instituted to account for the intended rise in minimum wage and the effect it will have on the economy.
Financial records auditors will come under greater scrutiny to ensure higher standards of legality. The government has decided that the selection pool for auditors will be widened and the selection process will be restructured. The Financial Supervisory Service’s inspection period will also be reduced from 25 to 10 years.
Electronic voting systems will be introduced and be required for all shareholder’s meetings. This will aid many smaller shareholders, as the technology enables voting without being physically present.
Limits on actions holding companies may take will become more pronounced, and the practiced method of “cross-holding” stock in multiple companies will also gradually be brought under review.
The Fair Trade Commission stated that as there may be the possibility that chaebol members will try to control domestic subsidiaries through foreign companies, it will require all foreign investments in Korean companies to be made public.
The intended changes will seek to improve oversight of financial corporations that are not classified as holding companies yet own various industrial and financial firms.
Intended policy changes will also help consumers embroiled in court cases against corporations. If one person wins a lawsuit against a company, all other plaintiffs who have filed lawsuits against the company for the same reason will be awarded appropriate compensation.