상법상 재별개혁 입법에 관한 연구

Abstract

The 1997 financial crisis has been triggered by the opaque governance of corporate groups and affiliates dictated by theheads and families of large conglomerates (hereinafter ‘chaebols’), and excessive economic power concentrated to the chaebols. For the majority of Korean citizens, it is remembered as a period of great painand its social ramifications still largely remain. A substantial number of large corporations and SMEs could not avoid bankruptcy, and even those who survived suffered too as they were forced into retrenchment. Within just two months since October of 1997, the Korean won depreciated by almost 70%, two thirds of total stock market capitalization evaporated, and economic growth posted -6.8%.

Hence in order to resolve these issues related to opaque corporate governance and concentration of economic power to the chaebols, various institutions such as cumulative voting and electronic voting (e-voting) were introduced under commercial law; and derivative action which only existed in letters began to be enforced. In addition, the Monopoly Regulation and Fair Trade Act (‘Fair Trade Act’), Debtor Rehabilitation and Bankruptcy Act, Asset-backed Securitization Act, Interest Limitation Act, Labor Standards Act and other related legislations underwent sweeping enactments and revisions.

As for commercial law, the revised commercial law of 1998 newly inserted articles on Shareholders’ proposal (Article 363-2), Cumulative voting (Article 382-2), Liability of Person who Instructs Another Person to Conduct Business (Article 401-2); also eased requirements for exercising minority shareholders’ rights which were previously set at 5% of total issued stocks (hereinafter shall mean total stocks excluding shares without voting rights) excluding non-voting stocks. The 1999 revision introduced articles on the Committees of Board of Directors (Article 393-2) and Audit Committee (Article 415-2).The following 2001 revision introduced ground rules to enable notification of convocation for shareholder meetings by electronic data (Article 363-1) and added articles on disposal and transfer of important properties and borrowing of large-scale assets, which are crucial for the authorities of the Board of Directors (Article 393-1). The 2009 revision added an article on electronic voting (Article 368-4) in addition to existing cumulative voting and voting in writing, all of which aim to strengthen or facilitate the process of exercising the rights of minority shareholders.

Despite such efforts, the scandal that revealed the truth about confidantes who seized actual power and cozy relations between politics and business; which erupted in September 2016 involving Park Geun-hye and Choi Soon-sil, distinctly attests to the fact the governance of large corporate groups and their affiliates have not been ameliorated even after two decades. Many institutions have been put in place, including in commercial law as part of lessons learned from the 1997 financial crisis, brought about by the high cost, low efficiency economic structure underpinned by opaque corporate governance; however they have proven to be less effective than intended. A more serious problem is that a few remaining large corporations that have leveraged their less-than transparent governance and mighty power (economic prowess), not hesitating to resort to an expedient or even irregular means are enjoying immense economic benefits, owning assets worth more than 90% of GDP of the Korea, all of which fall squarely into the hands of chaebols.

After all, chaebol reform is an essential mission of our time in order to improve the financial balance through better corporate governance of large conglomerates and ensure a sustainable engine of economic growth for Korea. The root causes of Korean chaebols’ abuse of large corporations and affiliates as means to expand their private wealth and dominance lie in ‘opaque corporate structure’ and ‘economic monopoly of chaebols’, both of which deserve in-depth scrutiny. However this study’s scope focuses on ‘improving corporate governance’, which is the more urgent goal among other short-term objectives, from a commercial law perspective in order to attain such goal. This study pays particular attention to the cumulative voting, e-voting systems and shareholder derivative suit; why they failed to achieve the intended outcome of improving corporate governance, and finally suggests corresponding alternatives.

Before presenting a detailed analysis and proposalof a legislation bill, the first chapter of this study examines the objective and scope of research, followed by a multifaceted observation of why legislation for reforming the chaebols is needed in Korea and a range of alternatives for such reform in the short, mid and longer term. Chapter 3 is an in-depth research about the cumulative voting system under commercial law as part of short-term solutions for chaebol reform. Chapter 4 focuses on e-voting in the same vein and Chapter 5 is about shareholder derivative suit and concrete proposals for revision. Last but not least, Chapter 6 examines the aforementioned contents to derive conclusions, which are as follows.

First, the cumulative voting system under current commercial law may be exempt from application through the articles of incorporation, which is why virtually no company has adopted the system. Therefore this paper proposes that such system is made mandatory so that it cannot be exempt from the articles of incorporation or through any other means, and the targets are expanded to encompass all corporations. This arises from the fact that the companies that chaebols abuse for their personal gains are mostly non-listed companies, rather than public ones. This paper further highlights that Korea should not follow in the footsteps of Japan by stipulating policies to ensure the legal status of directors appointed through cumulative voting. In the case this system is to be avoided due to its internal limitations including the delay in the appointment of directors, this paper suggests its prohibition through a comprehensive regulation, for the autonomy and flexibility in managing a company.

Second, e-voting system is permitted through a resolution adopted by the Board of Directors. However given the nature of the e-voting system, where the will of the shareholder regarding a subject matter for a general meeting of shareholders, written or displayed as part of an item within e-voting system should directly be reflected in the voting results; its use has not been efficient. This is due tothe existence of proxy to exercise voting rights and proxy solicitation, which make it much easier for chaebols, as dominant shareholders, to make decisions for their own benefits as the proxy or delegated person may make an arbitrary decision on an item. Also, based on the fact that the deferment of repealing systems such as shadow voting has rendered e-voting less effective, this paper proposes a legislation that obligates companies to implement these systems as a basic principle.

Third, while shareholder derivative suits are currently used as means to gain advantage in suits with ulterior motives led by some civil groups or disputes on the rights of management, the requirements to take such action should be eased so that it can be established as an universal remedy for violation of shareholder rights. In the case a company intentionally takes action to deprive the shareholder of standing to sue in a shareholder derivative suit, this paper proposes a legislation that would retain the plaintiff status for those shareholders who have already filed the suit. Furthermore, introduction of multiple derivative actions is recommended to guarantee the effectiveness of such system.