Priority share allocation for employee stock ownership association members to rise from 20% to 30%

Rep. Park Hong-bae of the Democratic Party of Korea [provided by the lawmaker's office]
Rep. Park Hong-bae of the Democratic Party of Korea [provided by the lawmaker's office]

Rep. Park Hong-bae of the Democratic Party of Korea, a member of the National Assembly's Political Affairs Committee, said Wednesday he had introduced two bills — dubbed the "two laws for growing salaried workers' assets" — to revitalize the employee stock ownership association system and expand the priority share allocation ratio for association members. The bills propose amendments to the Workers' Welfare Basic Act and the Financial Investment Services and Capital Markets Act.

Park said the growing polarization of real estate and financial assets has made it increasingly difficult for salaried workers to build wealth, underscoring the need to strengthen the employee stock ownership system so that workers can share in their companies' growth and accumulate long-term assets.

Calls to reform the system have persisted in the interest of advancing capital markets and spreading a culture of long-term investment. Practitioners have also raised concerns that democratic governance of employee stock ownership associations and shareholder rights protections remain inadequate, and that the system's scope is too narrow.

"I pursued these legislative amendments to develop the employee stock ownership system from a simple welfare measure into a leading asset-building vehicle for workers — grounded in labor-management cooperation — and a stable financing mechanism for companies," Park said.

The bills also give legislative form to policy proposals and on-the-ground opinions raised at a forum on expanding employee stock ownership to grow salaried workers' assets, hosted by the Democratic Party of Korea's "Wage Defense Corps" at the National Assembly in February last year.

The proposed amendment to the Workers' Welfare Basic Act includes provisions to promote democratic governance of employee stock ownership associations and foster labor-management cooperation. It also bans interference with, or unfavorable treatment of, association members exercising legitimate shareholder rights, and introduces a reporting, investigation and corrective-order regime. In addition, it requires the government to conduct regular surveys of how the system operates and to incorporate employee stock ownership promotion policies into the basic plan for improving workers' welfare.

The paired amendments to the Workers' Welfare Basic Act and the Capital Markets Act would raise the priority share allocation limit for association members in initial public offerings and rights offerings from the current 20 percent to 30 percent. The change is expected to broaden long-term investment and asset-building opportunities for salaried workers while strengthening the stable capital-raising base for companies.

"The core of these bills is to simultaneously achieve three goals: helping salaried workers build assets, giving companies a stable source of capital and a base of long-term shareholders, and spreading a long-term investment culture in the capital markets through the revitalization of employee stock ownership and labor-management cooperation," Park said. "This is an opportunity to catch all three birds needed to create a Korea premium."


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