SOUTH KOREA Law and Practice Contributed by: Bo Hee Park, Minhyun Cho, Ian Kim and Jun Hee Kwon, Jipyong LLC
Separate election of audit committee members For listed companies with assets of KRW2 trillion or more, or those with assets between KRW100 billion and KRW2 trillion that have established an audit com - mittee, the number of directors to be elected sepa - rately as “directors who will serve as audit committee members” has been increased to at least two (or more if prescribed by the AOI). Electronic general meetings Listed companies are now permitted to hold hybrid (ie, in-person and remote) shareholder meetings. For listed companies with total assets of KRW2 trillion or more, the holding of such hybrid meetings is now mandatory. Amendments to KRX Disclosure Regulations Following recent amendments to the KRX’s Disclosure Regulations, the requirement to publicly disclose cor - porate governance reports has been expanded to all KOSPI-listed entities. Shareholder Activism and Stewardship Code Shareholder activism has gained significant momen - tum in recent years. Institutional investors, including the National Pension Service (NPS), are increasingly adopting stewardship codes.
Board of Directors The board of directors is the executive body of a com - pany, consisting of all of the company’s directors. It has the authority to make decisions regarding the execution of business and to supervise the directors’ performance of their duties, including those of the rep - resentative director. Representative Director (or Executive Officer) The representative director represents the company externally and manages the execution of business internally. While the representative director is gener - ally appointed by the board of directors from among its members, the AOI may provide for appointment by the general meeting of shareholders. In a com - pany where an executive officer is appointed, a repre - sentative director cannot be appointed; in such cases, decision-making regarding the execution of business generally rests with the board of directors, while the actual execution falls under the authority of the execu - tive officer. Auditor (or Audit Committee) The auditor audits the accounting and business operations of the company. A company may option - ally establish an audit committee in lieu of an auditor; however, a listed company with total assets of KRW2 trillion or more is required to establish an audit com - mittee. A listed company with total assets of KRW100 billion or more but less than KRW2 trillion must either appoint a full-time auditor or establish an audit com - mittee (see 1.3 Companies With Publicly Traded Shares ). 2.2 Types of Decisions General Meeting of Shareholders The general meeting of shareholders makes decisions on fundamental matters that significantly affect the interests of shareholders. The KCC lists the following matters as subject to a resolution of the general meet - ing of shareholders: • matters concerning fundamental changes to the company – amendment of the AOI, merger, transfer of business, division or merger through division of the company, comprehensive exchange and trans - fer of shares, reduction of capital, dissolution, etc;
2. Corporate Management 2.1 Principal Bodies or Functions
The primary bodies involved in the governance and management of a company in Korea are the general meeting of shareholders, the board of directors, the representative director (or the executive officer) and
the auditor (or the audit committee). General Meeting of Shareholders
The general meeting of shareholders is a mandatory decision-making body of a company composed of its shareholders. It has the power to appoint and dismiss directors and possesses the authority to decide on significant matters, such as the amendment of the AOI.
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