SOUTH KOREA Law and Practice Contributed by: Jeena Kim, Kyunghwan Lee, Eunyoung Row and Bochan Kim, Bae, Kim & Lee LLC
8. Compliance Expectations 8.1 Compliance Obligations
when determining the sentence. For instance, as noted in 7.5 Recent Landmark Investiga- tions or Decisions , the court acknowledged that the decision of the head of a large corpo - ration to strengthen the compliance monitoring system after the offence should be viewed as a “post-offence circumstance”, which is one of the factors to be considered under Article 51(4) of the Criminal Code. However, the court also emphasised that, for a compliance programme to be used as a mitigating factor, its effective - ness must be thoroughly proven. In this case, the court found that the compliance programme had not been demonstrated to be effective, and thus could not be considered a mitigating factor. 8.2 Compliance Guidelines and Best Practices In South Korea, there are no compliance pro - gramme guidelines similar to (for example) the US Department of Justice’s “Evaluation of Corporate Compliance Programs” issued at the Ministry of Justice level. However, two key compliance programme guidelines have been published by regulatory authorities. The Korea Fair Trade Commission (KFTC) intro - duced the Fair Trade Compliance Program (the “Fair Trade CP”) in 2001 to promote fair and autonomous market operations by corporations. At the time of its initial implementation, the pro - gramme was operated through policy recom - mendations, administrative rules and notices issued by the KFTC, encouraging voluntary adoption by the market. In 2023, amendments to the Fair Trade Act established concrete legal grounds for the programme, along with detailed provisions for evaluation and incentives. These amendments were set to take effect in June 2024. Under the revised framework, incentives such as reductions in corrective measures or
According to Article 542-13 of the Commercial Act, companies of a certain size (total assets of KRW500 billion or more) must establish “com - pliance standards” and appoint a compliance officer who meets specific qualifications (such as being a licensed attorney) to ensure the implementation of these standards. The com - pliance standards include matters related to legal regulations and procedures that employ - ees must follow in their work, as well as sys- tems for education and monitoring to prevent and address violations of the law by employees. There is no direct criminal penalty for violating the obligation to establish compliance stand - ards or appoint a compliance officer. However, if the company suffers damage due to the fail - ure to establish an adequate compliance sys - tem, shareholders may file a lawsuit for dam - ages against the company’s directors, claiming that they failed to fulfil their duty of loyalty and care by not establishing and operating an inter - nal control system. Recently, courts have shown a tendency towards increasingly recognising director liability in such cases. The sentencing guidelines for bribery-related offences in South Korea do not explicitly recog - nise the implementation of a compliance pro - gramme within a company as a mitigating fac - tor. South Korea has a sentencing committee under the Supreme Court that provides stand - ards reflecting the nature of each crime. While these standards are not legally binding, if a judge departs from them, they must justify the decision in the judgment. There have been cases where the courts consid - ered the presence of a compliance programme
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