SOUTH KOREA Trends and Developments Contributed by: Ki Wook Kang, Kyung Chun Kim, Junghae Kang and Do Kyeom Kim, Lee & Ko
of a large listed company is required to be elected separately from other directors by a resolution of the general meeting of shareholders. The amend - ment increases the number of audit committee members subject to separate election to at least two. As a result, minority shareholders are expect - ed to have greater influence in the election of audit committee members. Recent Legal Developments – Implementation of the Enforcement Decree of the FSCMA Concerning the Enhancement of Treasury Share Disclosure The amended Enforcement Decree of the Financial Investment Services and Capital Markets Act (FSC - MA), together with the Regulations on Issuance and Disclosure of Securities and the Regulations on Inves - tigation of Capital Markets, which primarily aim to strengthen treasury share disclosure requirements for listed companies, came into effect on 30 December 2025. The key features of the amendments include: (i) the expansion of the scope and frequency of disclo - sure; (ii) the addition of disclosure requirements com - paring treasury share acquisition, disposal, or can - cellation plans with the actual implementation status; and (iii) the strengthening of sanctions for violations of treasury share disclosure obligations. • Expansion of the Disclosure Threshold and Fre - quency: Under the amendment, a listed company holding treasury shares equivalent to at least 1% of its total issued shares, as of 30 June and the fiscal year-end of the relevant fiscal year, is required to prepare a treasury share report, obtain approval from its board of directors, and attach such report to its semi-annual report and annual report. This change lowers the disclosure threshold from “holding treasury shares of 5% or more of the total issued shares” to “1% or more”, and increases the frequency of disclosure from once per year to twice per year. • Mandatory Comparison Between Treasury Share Plans and Actual Implementation: The amendment requires that the treasury share report attached to the annual report and semi-annual report include a comparison between (i) the treasury share acquisi - tion, cancellation, and disposal plans set forth in the immediately preceding treasury share report and (ii) the actual treasury share acquisition, can -
cellation, and disposal activities carried out during the preceding six-month period. In addition, the same information must also be disclosed in the main body of the annual report and semi-annual report. Recent Legal Developments – Amendment to the Yellow Envelope Act The amendments to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act (the “Yel - low Envelope Act”) were passed at the plenary ses - sion of the National Assembly on 24 August 2025, and are scheduled to take effect on 10 March 2026. The amendments expand the definition of “employer” to strengthen the autonomy of labour unions and the protection of union activities, while significantly limit - ing employers’ rights to claim damages against unions and their members. • Expansion of the Scope of “Employer”: The amended Yellow Envelope Act expands the defini - tion of employer to include any person or entity that effectively controls or determines the working conditions of employees. As a result, even a labour union composed of workers who do not have a direct employment relationship with a company may, if such criteria are met, request collective bargaining with the company or other entity that exercises control over the workers in practice. • Strengthening the Right to Join and Engage in Union Activities: The amendment removed the provision under the current Yellow Envelope Act that restricted union membership only to employ - ees, thereby allowing workers who are not formally classified as employees, including workers under non-traditional types of employment arrangements and platform workers, to join labour unions. • Expansion of the Scope of Labour Dispute Actions: Under the current Yellow Envelope Act, only matters relating to the determination of working conditions were subject to labour dispute actions by workers. The amendment expands the scope to include other managerial decisions that affect working conditions, as well as material breaches of collective bargaining agreements. • Limitation on Union Liability for Damages: The amendment restricts an employer’s ability to seek damages against a labour union for losses arising
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