The top executives of 16 major Korean conglomerates, including Samsung, SK, Hyundai Motor and LG, on Thursday issued a rare joint statement opposing the proposed revision to the Commercial Act, which aims to increase the duties of corporate board members.

“The proposed revision will lead to excessive litigation and potential attacks from overseas speculative investors, thereby hindering the normal management activities of board members,” the business leaders said. “This will obstruct the discovery of new growth engines and ultimately result in the devaluation of domestic companies and the stock market.”

It is rare for major corporate executives to issue a joint statement. This declaration is a response to the main opposition Democratic Party’s push for the Commercial Act amendments despite resistance from the ruling party and the business community.

The proposed revision aims to extend the fiduciary duty of board members beyond the company to include shareholders. It also stipulates that the board must protect the interests of all shareholders and treat them equitably. Under the current Commercial Act, board members have a fiduciary duty to the company only.

The revision also includes provisions aimed at protecting minority shareholders: introducing cumulative voting in the election of directors, increasing the number of audit committee members elected separately, renaming outside directors as independent directors, and adopting electronic general shareholder meetings.

The Democratic Party aims to pass the revision by the end of the year.

But businesses are concerned that the revision could empower activist funds who have increasingly raised proxy fights against major companies for short-term profits despite their tiny shares.

“Many scholars also agree that the revision could undermine the foundation of the current corporate system,” the executives said.

“There is a need to improve systems to prevent unintended harm to minority shareholders when restructuring a company to streamline its management. However, amending the Commercial Act could significantly disrupt overall corporate management.”

They also stressed that this is not the right time to put more pressure on businesses considering growing uncertainties at home and abroad.

“If current challenges persist, the Korean economy may fall into an inescapable quagmire,” they said. "Recently, our economy has been experiencing prolonged low growth due to weakened growth drivers, and even exports, which have been the cornerstone of the economy, are facing an uncertain future due to weakened competitiveness in key industries and the spread of protectionism. To reduce economic uncertainty and revive growth drivers, companies must take the lead.”

They called for regulatory reforms to stimulate the economy, saying more substantial support should be given to high-tech industries such as semiconductors, batteries, mobility, bio, energy and industrial materials, given that their global rivals are already fully supported by their own governments.

After the Democratic Party adopted the amendments as party policy, the nation’s major business groups, including the Korea Chamber of Commerce and Industry, the Korea International Trade Association, and the Federation of Korean Industries, immediately issued a statement to oppose the move.

The Democratic Party plans to meet with major companies next week to share views on the issue.