SOUTH KOREA Law and Practice Contributed by: Ho Joon Moon, Tae Jung Kim, Do Kyeom Kim and Ji Geon Park, Lee & Ko
company’s business. Most companies have a board of directors, but for smaller companies of under a certain size, the shareholders’ meeting or directors may serve in this role. The board of directors is composed of all direc - tors, regardless of whether they are inside direc - tors, outside directors or non-executive direc - tors. However, as mentioned above, in the case of a publicly traded company, the board of direc - tors must be composed of at least a certain per - centage of outside directors. Statutory Auditor/Audit Committee The statutory auditor has the authority to attend the board of directors’ meetings and inspect and supervise directors’ performance, audit the accounts and ensure general compliance with the law (similar to outside directors). According to the KCC, joint stock companies with paid-in capital of KRW1 billion or more must appoint a statutory auditor or establish an audit committee, regardless of whether they are publicly traded companies or not, while publicly traded companies with total assets exceeding KRW2 trillion must establish an audit committee instead of simply appointing a statutory auditor. An audit committee must consist of three or more directors, with outside directors making up two-thirds or more of its members. In the case of publicly traded companies, at least one member of the audit committee must be a financial or accounting expert, and the chairperson must be an outside director. Representative Director The representative director has the authority to represent the company externally and execute internal operations, and is an essential figure within a joint stock company. According to
the KCC, the representative director must be appointed by the board of directors, although the articles of incorporation may allow for appoint - ment by the shareholders’ meeting. While many companies typically have only one representative director, it is also permitted for companies to have more than one. In the case of multiple representative directors, such repre - sentative directors may be granted (i) the author - ity to jointly represent the company, in which case they will act together in their executive actions, or (ii) the authority to independently rep - resent the company, in which case each of them will, alone, act independently in their executive action. 3.2 Decisions Made by Particular Bodies General Meeting of the Shareholders The major decisions made by the general meet - ing of shareholders include, without limitation, the following: • appointment of directors and auditors; • approval of the financial statements; • dividend distribution; and • amendments to the articles of incorporation and other significant corporate actions (such as M&A, corporate restructuring, dissolution and liquidation, etc). Under the KCC, the following decisions must be reserved for the shareholders, and may be resolved by a majority of votes among the shareholders present at the general meeting rep - resenting more than a quarter of the total out - standing shares of the company: • appointment of a director or a statutory audi - tor; • approval of the annual financial statements;
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