SOUTH KOREA Trends and Developments Contributed by: Ki Wook Kang, Kyung Chun Kim, Junghae Kang and Do Kyeom Kim, Lee & Ko
meetings for listed companies; (iii) the expansion of the 3% voting cap in the separate election of audit committee members of large listed companies; and (iv) the replacement of “outside directors” by “inde - pendent directors” and the increase in the mandatory minimum ratio of independent directors. • Expansion of the Scope of Directors’ Fiduciary Duty to Include Shareholders: The amendment expands the scope of directors’ fiduciary duty by expressly including shareholders, in addition to the company, as the beneficiaries of such duty. A new paragraph has been added to the Korean Com - mercial Code to provide that, in performing their duties, directors are now required to protect the interests of all shareholders and treat the interests of all shareholders fairly. As a result, questions may arise as to whether directors may be directly liable for damages to shareholders in connection with the performance of their duties. • Introduction of Electronic Shareholders’ Meetings: The amendment provides that a listed company may hold a shareholders’ meeting through elec - tronic means upon an approval of its board of directors. In addition, listed companies meeting certain criteria, such as total assets as prescribed by the Presidential Decree, are now required to hold shareholders’ meetings by electronic means. • Expansion of the 3% Voting Cap for the Appoint - ment and Removal of Audit Committee Members of Large Listed Companies: The amendment extends the application of the 3% voting cap by providing that, in the appointment or removal of any audit committee member, regardless of wheth - er such member is an outside director, the voting rights of the largest shareholder and its specially related parties may not be exercised with respect to any shares exceeding 3% in the aggregate. This measure is intended to enhance the influence of minority shareholders by limiting the voting power of controlling shareholders in the selection of audit committee members, while also strengthening the effectiveness of internal controls through the audit committee. • Appointment of Independent Directors and Increase in the Minimum Required Ratio for Listed Companies: The amendment requires listed com - panies to appoint independent directors in place
of outside directors and increases the minimum required ratio of independent directors. In particu - lar, the minimum ratio previously applicable to out - side directors under Article 542-8 (1) of the Korean Commercial Code has been raised to at least one- third of the total number of directors. This change is intended to enhance board independence by strengthening the requirements for appointing independent directors in listed companies. Recent Legal Developments – Second Amendment to the Korean Commercial Code in 2025 A partial amendment to the Korean Commercial Code, incorporating provisions that had been excluded from the first amendment in July 2025, was passed at the plenary session of the National Assembly on 25 August 2025, and was promulgated on 9 September 2025. The key features of the amendment include: (i) the mandatory adoption of cumulative voting for large listed companies; and (ii) the expansion of the separate election requirement for audit committee members of large listed companies (from at least one member to at least two members). • Mandatory Adoption of Cumulative Voting for Large Listed Companies: Under the pre-amendment Korean Commercial Code, companies, regardless of whether they are listed or, if listed, regardless of their size, may exclude a cumulative voting scheme through articles of incorporation. The amendment, however, provides that large listed companies (ie, companies with total assets of KRW2 trillion or more as of the end of the most recent fiscal year) may not exclude a cumulative voting scheme by articles of incorporation. As a result, the directors who represent the interests of minority sharehold - ers in large listed companies are expected to increase, thereby enhancing minority shareholder protection. At the same time, this change may also lead to an increase in management control disputes between controlling shareholders and minority shareholders with a significant level of shareholding, as well as a greater number of hostile takeover attempts by activist investors. • Expansion of the Separate Election Requirement for Audit Committee Members of Large Listed Companies: Under the current Korean Commercial Code, at least one member of the audit committee
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