SOUTH KOREA Law and Practice Contributed by: Ho Joon Moon, Tae Jung Kim, Do Kyeom Kim and Ji Geon Park, Lee & Ko
4.4 Appointment and Removal of Directors/Officers
outside directors. They are not required to have independence, unlike outside directors, and are treated like inside directors in terms of legal regulations. Regardless of whether a member is an inside director, outside director or non-executive direc - tor, each (other than the statutory auditor) shall have an equal vote over any matter submitted to the board of directors for approval, and no cast - ing vote is permitted under the KCC. 4.3 Board Composition Requirements/ Recommendations Under the KCC, a company with total capi - tal of less than KRW1 billion may have one or two directors, otherwise the requirement is to appoint at least three directors. The size of the board of directors can also be determined in the articles of incorporation, subject to the foregoing requirements under the KCC. For outside directors (ie, one of the members of the board of directors), a publicly traded com - pany must appoint more than one-quarter of its directors as outside directors; a large publicly traded company with total assets of equal to or above KRW2 trillion must appoint three or more outside directors, making up the majority of the board of directors. As stated, when establishing an audit commit - tee within the board of directors, the commit - tee must consist of three or more directors, with outside directors making up two-thirds or more of the 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 of the audit com - mittee must be an outside director.
Shareholders have the power to appoint or remove directors through the general meeting of the shareholders. Under the KCC, the appoint - ment of directors will require a majority of votes of shareholders present at the general meeting representing more than a quarter of the total out - standing shares of the company; for the removal of directors, more than two-thirds of the votes will be required from those shareholders present at meeting, representing more than a third of the total outstanding shares of the company. Although there are no particular criteria for becoming a director, a statutory auditor of a company cannot also hold the office of director. Furthermore, a person who falls within any of the following categories cannot be an outside director of a company: • directors and employees engaged in the regular business of the company, or direc - tors, auditors and employees who have been engaged in the regular business of the com - pany within the previous two years; • in instances where the largest shareholder is a natural person, the largest shareholder, their spouse, lineal ascendants and lineal descendants; • in instances where the largest shareholder is a company, directors, auditors and employ - ees of the largest shareholder; • spouses, lineal ascendants and lineal descendants of directors, auditors or execu - tive officers of the company; • directors, auditors, executive officers and employees of the parent or subsidiary of the company; • directors, auditors, executive officers and employees of another company that has a
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