SOUTH KOREA Law and Practice Contributed by: Ki Wook Kang, Kyung Chun Kim, Junghae Kang and Do Kyeom Kim, Lee & Ko
to labour dispute actions (eg, labour strike, walk - out, picketing) is broadened to include managerial decisions affecting working conditions and material breaches of collective agreements; and (iii) an employ - er’s claims for damages against a labour union arising from labour dispute action are restricted. Accordingly, enhanced communication through labour unions or labour-management councils will be required in con - nection with material managerial decisions, particular - ly workforce reductions, restructuring, and corporate transactions such as mergers, acquisitions, or spin- offs. See the South Korea Trends and Developments article in this guide for further details. Restriction on Voting Rights of Shareholder- Directors in Resolutions Approving the Ceiling on Directors’ Remuneration On 24 April 2025, the Korean Supreme Court held that a person who is both a director and a shareholder of a company constitutes a specially interested party with respect to a shareholders’ resolution approving the ceiling on directors’ remuneration and therefore is restricted from exercising voting rights on such agen - da. Accordingly, the Supreme Court determined that the relevant shareholders’ resolution was unlawful and should be revoked. See the South Korea Trends and Developments article in this guide for further details. Transfer of Shares in a Subsidiary Conducting Core Business Operations On 16 October 2025, the Korean Supreme Court held that the transfer of shares in a subsidiary conducting core business operations constitutes a material trans - fer of business and therefore requires a special reso - lution of the shareholders’ meeting, which must be approved by at least two-thirds of the voting rights of the shareholders present and at least one-third of the total issued and outstanding shares. See the South Korea Trends and Developments article in this guide for further details. 3.2 Significant Changes to Takeover Law Expansion of the Scope of Directors’ Duty of Loyalty On 22 July 2025, a partial amendment to the Korean Commercial Code expanding the scope of directors’ duty of loyalty came into effect. The amended Com - mercial Code adds shareholders – alongside the com -
pany – as beneficiaries of the duty of loyalty and pro - vides that, in performing their duties, directors must protect the interests of all shareholders and treat the interests of the entire body of shareholders fairly and equitably. With the directors’ duty of loyalty to share - holders now expressly codified, debate may arise as to whether, and to what extent, directors may bear direct liability for damages to shareholders in con - nection with the performance of their duties for the company. In addition, in transactions involving cor - porate reorganisations – such as mergers or spin-offs – or other situations giving rise to conflicts of interest among shareholders, it will be necessary to undertake more rigorous review from the perspective of share - holder interest protection and to consider establishing relevant internal control standards and procedures. While, in principle, the interests of the company gen - erally align with those of its shareholders, and it may be argued that a director’s duty of care and loyalty as a fiduciary of the company already encompasses the protection of the interests of all shareholders, prac - tical changes may nonetheless be required in deci - sion-making relating to corporate reorganisations or capital transactions where concerns have historically been raised regarding the infringement of proportional shareholder interests. Examples include the listing of a spun-off subsidiary following a physical division, alle - gations of unfair merger ratios, capital increases or treasury share disposals in favour of specific parties, and squeeze-out transactions affecting minority share - holders. Accordingly, companies will need to conduct more stringent review and scrutiny of transactions that may give rise to conflicts of interest among share - holders. In particular, companies – especially listed companies with heightened exposure to challenges from minority shareholders – may need to establish proactive measures, including the implementation of additional internal control standards and procedures designed to ensure fair and equitable treatment of the interests of all shareholders. Voting Rights Cap in the Appointment and Removal of Audit Committee Members On 22 July 2025, an amendment concerning the 3% voting rights limitation applicable to the appointment and removal of audit committee members of listed companies with total assets of KRW2 trillion or more was promulgated and is scheduled to take effect on
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