The Korean Inc. struggling with losing competitiveness and disgrace from high-profile political scandal has management instability added to its list of worries as opposition-led legislative is poised to pass revisions to the Commercial Act largely aimed to constrain chaebol excesses by restricting voting rights of shareholders proportionate to their stake ratio.

The floor leaders of four mainstream parties agreed to pass the revised bill on the Commercial Act next week that would allow cumulative voting, limit large shareholders’ rights to vote on outside auditor, and disallow use of treasury shares to have interest in spun-off entities.

Yoo Il-ho, deputy prime minister for economy, sympathized with corporate concerns over the new regulation that would make the management more preoccupied with protecting their management rights than investing and hiring.

“The revised act could bring about other side effects such as threat to management stability,” Yoo said in a breakfast conference sponsored by the Korean Chamber of Commerce and Industry on Monday.

He indicated that protective mechanism should be ensured for the management side to offset the potential side effects from the new law. The business circle has been demanding legalization of dual-class rights after SK and KT&G came under predatory attacks from overseas hedge funds.

The legislative motion comes after top chaebol group owners had been implicated in the power abuse scandal of President Park Geun-hye who faces impeachment trial for granting use of presidential influence to her friend Choi Soon-sil and demanding corporate donations in return for favors.

Samsung Group’s de facto leader Jay Y. Lee is under custody and faces trial for multiple offenses including bribery and embezzlement. Other chaebol names Lotte, SK, and CJ Group have also been accused of favoritism.

Opposition camps argue such collusive relationship and corruption was possible because family owners of Korean chaebols can run their conglomerates and business for selfish interests with just small stakes through the use of cross-affiliate stake-holding.

Park Yong-man, chairman of the KCCI, said the new act would be like “using a sledgehammer to crack a nut” to warn of grave consequences on Korean businesses.

A survey on exporters by the Korea International Trade Association (KITA) showed that more than half of CEOs at Korean exporters were against the regulation. Another 31.8 percent asked for more prudence. Less than 9 percent was agreeing to the need to force the changes in corporate management.

The revision proposals include a mandatory adoption of the cumulative voting system in companies to allow each share to have multiple voting rights equivalent to the number of directors to be appointed. It would make it easier for small shareholders to concentrate their votes to one candidate who has the same interests with them.

Other provisions would force companies to appoint independent auditors and limit the voting rights of the largest shareholder to 3 percent when selecting auditors.

The changes would upset Samsung Electronics Co.’s plan to split into holding and operation entities as they disallow use of treasury shares in a new entity.

The Lee family members held a 4.91 percent stake in Samsung Electronics and 18.5 percent in entire Samsung units as of the end of January. If they cannot get equity ratio in new shares equivalent to their existing shares, they cannot meet the holding requirement of having 20 percent in listed companies and 50 percent in unlisted entities.

It would cost the family astronomical figures if it has to buy new shares tantamount to the equity requirement, said Choi Joon-sun, a professor from Sungkyunkwan University Law School.

By Song Sung-hoon, Kim Dong-eun and Kim Dae-gi

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