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By having 0.01% of the shares
Simulation of modifications to commercial law
Litigation is not possible in Japan
Photo = Yonhap News
When the multi-representative litigation system included in the reform to the commercial law promoted by the government is introduced, the shareholders who own 0.01% of the shares of a listed company can file a lawsuit not only against the subsidiary of the company. listed, but also from the executives of his grandchildren. It is argued that the UK, Germany, etc., do not recognize multiple representative judgments, and that the standards are excessive even compared to Japan.
In accordance with the reform to the commercial law presented by the government to the National Assembly on the 14th, the multi-representative lawsuit system allows filing a representative lawsuit against the (executive) directors of the subsidiary if the directors of the subsidiary cause damage to the company. subsidiary. Institution’. In the case of listed companies, the government is seeking a revision of the law so that shareholders with a stake of 0.01% or more (1% of unlisted companies) can sue the directors of subsidiaries.
Typically, a subsidiary refers to a company in which the parent company has shares. In commercial law, a company whose parent company owns more than 50% is considered a subsidiary. But it does not end there. This is because the range of subsidiaries stipulated by Korean business law is very wide.
In accordance with article 342-2, paragraph 3 of the Trade Law, which regulates the scope of subsidiaries, ‘if the parent, subsidiary or subsidiary owns shares that exceed 50/100 of the total number of issued shares of other companies , the other company will apply this Law. It is said that it is considered a subsidiary of the parent company. This means that the subsidiaries of subsidiaries, that is, subsidiaries, are included in subsidiaries.
For example, if Company A owns more than 50% of the shares of Company B, B is a subsidiary of A. At this time, if B owns more than 50% of the shares of C, C becomes the subsidiary of A under commercial law, even if A does not own C’s shares.
Article 342-2 of the Trade Law, which regulates the scope of subsidiaries.
Based on this standard, I applied it to Kakao, which has 97 affiliates. If the trade law amendment passes, shareholders who own more than 0.01% of Kakao’s shares can sue not only 18 subsidiaries such as Kakao Ventures, Kakao Pay and Kakao Games, but also the executives of 36 subsidiaries, including Kakao Pay Securities, Kids Note and K Venture Group. There will be. This is equivalent to 55.6% (54 companies) of all subsidiaries.
In Japan, you can file a lawsuit against a subsidiary with just one action. However, the subject of lawsuits is limited compared to Korea. In Japan, the parent company must own 100% of the share capital, and only subsidiaries whose book value of the subsidiaries’ shares exceeds 20% of the parent company’s assets can sue.
When Kakao was applied as a Japanese standard, there was no affiliated company for which Kakao shareholders could file multiple proxy claims. An official from the Korea Listed Companies Association noted: “Even considering US precedents and Japanese legislative laws, the standard of ‘subsidiary’ in Korea lacks any rationale or rationale.”
The KOSDAQ Association, mostly small and medium-sized companies, was concerned that the risk of litigation would increase with smaller companies. According to the KOSDAQ Association, companies listed on the KOSDAQ market, representing 84% of companies with a market capitalization of less than 300 billion won, can file a lawsuit even if they own shares worth at least 2 million won. won.
Reporter Mi-Hyun Cho [email protected]
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