Impact of the Commercial Act Amendment on Individual Investors and Notable Beneficiary Stocks

Why is the Commercial Act amendment important?

Since 2024, the Korean government has been actively pushing for amendments to the Commercial Act aimed at improving corporate governance and strengthening shareholder rights.
This amendment goes beyond a simple legal update—its goals include enhancing corporate management transparency, protecting minority shareholder rights, and restoring market trust.
For individual investors, this is a key issue that could directly impact their investments.

 

Key Amendments and Their Impact on Individual Investors

1. Key Amendments

Category	Direction of Amendment
Multi-derivative suit introduction	Allows parent company shareholders to sue the directors of its subsidiaries
Expansion of cumulative voting	Enables minority shareholders to have more influence in appointing directors
Strengthening of shareholder proposal rights	Shareholders can submit agenda items if certain conditions are met
Changes in auditor appointment system	Limits major shareholders’ voting rights to strengthen checks and balances
Encouragement of treasury stock cancellation	Promotes cancellation of treasury shares → enhances shareholder value

 

2. Impact on Individual Investors

Positive Impacts:

Greater opportunities for minority shareholders to participate in management

Increased ability to check and balance major shareholders → potential for increased corporate value

Treasury stock cancellation → potential increase in per-share value

Potential Concerns:

In the short term, backlash from large corporations may increase market uncertainty

Defensive spending on governance reform may reduce profits in some companies

3. Notable Beneficiary Stocks

Type	Example Companies	Key Benefits
Companies with large treasury stock and high cancellation potential	LG Display, Samsung Electronics	Shareholder value may increase if treasury shares are canceled
Companies with past governance issues	Hyosung, HDC Hyundai Development Company	Transparency improvements may reduce corporate discount
ESG / shareholder-friendly companies	SK, CJ ENM	Likely to attract long-term investors

 

Opportunity or Risk for Individual Investors?

While the Commercial Act amendment may introduce short-term uncertainty due to corporate resistance and institutional confusion,
in the long term, it serves as a pivotal shift to enhance minority shareholder rights and transparency,
ultimately contributing to higher corporate value.

Individual investors are no longer just "retail investors" but must evolve into active shareholders who understand and exercise their rights.
Proactively identifying beneficiary industries and companies aligned with the reform can serve as a powerful differentiation strategy in today’s market.