SOUTH KOREA Law and Practice Contributed by: Ho Joon Moon, Tae Jung Kim, Do Kyeom Kim and Ji Geon Park, Lee & Ko
2. Corporate Governance Context 2.1 Hot Topics in Corporate Governance ESG Disclosure Rules The Financial Services Commission announced plans to require publicly listed companies to adopt mandatory ESG disclosure rules by 2026, and South Korea is preparing disclosure stand - ards and timelines to align with global standards as well. The Financial Services Commission plans to establish standards by referring to relevant standards from the EU, the US, and other juris - dictions, while taking into account the specif - ic characteristics of the domestic market and companies. These standards will be introduced gradually, beginning with large publicly traded companies, based on the readiness of the dis - closing entities. However, considering the delay in discussions on mandatory ESG disclosures in major countries such as the US, introducing ESG disclosure regulations in Korea may be further delayed. Rise in Shareholder Activism Shareholder activism has been on the rise in recent years, increasing ninefold since 2019 in Korea with 77 companies headquartered there targeted by activist campaigns in 2023, accord - ing to a report published by the Federation of Korean Industries. For further information on shareholder activism campaigns, please refer to the Trends & Development section (link). 2.2 ESG Considerations For publicly traded companies, the Corporate Governance Report system aims to enhance governance transparency. Currently, companies in the KOSPI with assets exceeding KRW1 trillion are required to submit
corporate governance reports according to the guidelines of the Korea Exchange, which are continuously revised. As per the revised guide - lines in 2025, the corporate governance report must include compliance with a total of 15 key indicators for shareholders, the board of direc - tors, and internal audit. These indicators must show: • whether dividend predictability is ensured; • that communication with minority sharehold - ers and institutional investors is improved; • the status of financing, with different share - holder interests; • that the board is sufficiently diverse; • that a reasonable compensation policy for directors is in place; and • that no unqualified executives have been appointed. 3. Management of the Company 3.1 Bodies or Functions Involved in Governance and Management The principal bodies involved in the governance and management of a company in South Korea are (i) the general meeting of the shareholders, (ii) the board of directors, and (iii) the statutory auditor (or audit committee). General Meeting of the Shareholders The shareholders’ meeting is the highest deci - sion-making body that resolves important mat - ters for the company. As the name implies, the members of the shareholders’ meeting are shareholders, while directors and auditors may attend the meeting but are not official members. The Board of Directors The board of directors is a standing body organ - ised to make key decisions on the conduct of a
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