[Bills in Focus] Early dividend settlement, cyber threat and new airport

Proposed Bill: Partial Amendment to the Financial Investment Services and Capital Markets Act

Proposed by Rep. Kim Hee-gon (People Power Party)

● In the current Act, the stockholders eligible for dividend payout are determined several months before the finalization of the actual dividend amount, which means that investors must invest in stocks without knowing the dividend amount. This system deviates from the global standard and discourages long-term investment, leading to the undervaluation of Korea’s stock market. Although the government amended the law in January to allow the dividend settlement amount to be determined before the eligible stockholders are determined, amendments are still required for the Financial Investment Services and Capital Markets Act on this matter.

This amendment removes the provision that fixes the eligibility for dividend payout as registered stockholders as of the last days of the third, sixth and ninth months. Instead, it allows the board of directors to determine the amount of quarterly or biannual dividends before determining the eligible stockholders, thereby facilitating the long-term investment of dividends and representing a step forward for an advanced stock market.

Proposed Bill: Partial Amendment to the Act on Promotion of Information and Communications Network Utilization and Information Protection

Proposed by Rep. Kim Yeung-shik (People Power Party)

● Backdoors, which are secretly installed during the development or distribution of a hardware or software to disable the security system without normal authentication, are often cited as the main culprit of cyber security incidents, such as information leakage. The current act makes it difficult to preemptively prevent or address backdoor infringement incidents as it lacks regulations concerning the installation, delivery and distribution of backdoors and only prescribes responses and penalties to hacking accidents that have already occurred.

This amendment aims to prevent attempts to install, deliver and distribute backdoors to information and communication networks for malignant intentions by newly adding penalty provisions prescribing penalties against anyone who installs, delivers or distributes backdoors.

Pending Bill: Act on the Restoration of Fairness in the Digital Asset Market and Establishment of a Safe Transaction Environment

Proposed by Rep. Yun Chang-hyun (People Power Party)

● The scale of arrested illegal activities involving digital assets increased over 18-fold and reached 3.13 trillion won ($2.36 billion) last year, causing extensive damage to many users. To address the urgent need to regulate unfair trading and restore fair order in the digital asset market, a user protection regulatory system with minimum regulations must first be established. This system can later be gradually supplemented with step-by-step legislation to accommodate global standards.

This bill compares, analyzes, and reflects anti-unfair trading provisions included in the 14-digital asset-related bills currently pending before the National Assembly’s National Policy Committee and focuses on the protection of user assets (protection of user deposits from the bankruptcy of digital asset service providers), the prohibition of unfair trade practices (use of nonpublic information, manipulation of market price, unfair trading, etc.) and the responsibility for autonomous monitoring (market monitoring and imposition of the obligation to report, etc.). Moreover, this bill prescribes submission guidelines under the addenda for matters requiring research and analysis so that the Financial Services Commission can support the upcoming supplementary legislation that reflects the discussions of international organizations in 2023.

Promulgated Bill: Special Act on the Construction of Daegu-Gyeongbuk Integrated New Airport

Competent Ministry: Ministry of Land, Infrastructure and Transport

● This act aims to facilitate the construction of Daegu-Gyeongbuk Integrated New Airport and the development of previously constructed sites (sites where a military air base has been installed) by prescribing the establishment of development projects necessary for the integrated new airport project, the development processes, support projects, financing, administrative and financial support of the State, special cases and deregulation necessary for the construction project, and the designation of special areas.

Administrative Announcement: Partial Amendment to the Enforcement Decree of the Subsidy Management Act

Competent Ministry: Ministry of Economy and Finance

● The government spent over 102 trillion won on national subsidies in 2023. Considering the substantial amount of federal funding dedicated to subsidy programs, the external audit quality must be enhanced to prevent the mismanagement of national subsidies and ensure transparency.

This amendment aims to minimize financial losses and guarantee the transparent and efficient operation of national subsidy programs by reinforcing the auditing of settlement reports. It lowers the threshold for subsidy programs or indirect subsidy programs that must conduct external audit on settlement reports from programs of 300 million won to 100 million won.

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The Korea Herald republishes a weekly legislative report by a local law firm DR & Aju LLC to provide the latest information of bills approved, proposed, pending and set to be promulgated. -- Ed.

For any queries about the bills, contact cr@draju.com.