After two years of debate, the South Korean legislature has finally passed a bill establishing a private securities class action system. The Korea Times reports, however, that the bill contains phase-in and standing requirements that may limit its effectiveness. (The 10b-5 Daily has posted frequently about the debate over this legislation, most recently here.)
Initially (commencing in Jan. 2005), suits will be limited to companies with assets of more than 2 trillion won ($1.67 billion). Only about 80 of the 1500 publicly-traded South Korean companies meet this benchmark. Smaller companies can be sued starting in July 2007. Also, a suit will only be permissible if more than 50 shareholders, owning at least 0.01% of the outstanding shares of the company, agree to bring the case.
Quote of note: “Civic organizations described the revised bill as a ‘toothless tiger,’ pointing out it completely blocks the possibility for suits against big business conglomerates. For example, they said, shareholders might need to amass stocks worth more than 7 billion won to meet the 0.01 percent requirement in a file against Samsung Electronics.”