South Korea’s Acting President and Prime Minister Han Duck-soo on April 1 vetoed the proposed Commercial Act amendment, which seeks to expand company directors' fiduciary duties to include both the company and its shareholders.
Han, presiding over a Cabinet meeting in Seoul, said the government vetoed the bill and sent it back to the National Assembly for reconsideration.
“The government shares the bill’s goal of protecting minority shareholders and improving corporate governance,” Han said. “But its current form could undermine the competitiveness of many companies and create legal uncertainty for directors. We need to find alternatives that minimize potential side effects.”
Han noted that the language of the bill is too vague. “While the bill aims to ensure directors fairly consider the interests of all shareholders, the current language of the amendment makes it unclear in practice what kind of decision-making would truly serve all shareholders equally.”
He said this ambiguity could expose directors to civil and criminal liability risks across all management decisions, potentially discouraging bold decision-making, which could ultimately weigh on economic growth.
Han stressed that the government does not oppose the bill’s underlying intent. “As an alternative, the government has proposed revising the Capital Markets Act to better protect minority shareholders during corporate transactions such as mergers and spinoffs,” he said, urging lawmakers to “examine both the vetoed amendment and the proposed alternative to find a more practical solution.”
This marks the seventh time Han has exercised the veto power under the Yoon administration. Under South Korean law, the National Assembly can override a presidential veto with a two-thirds majority vote, provided more than half of all lawmakers are present. If lawmakers fail to meet the threshold, the bill will be scrapped.
